Jeremy Hunt slashes energy bills support for businesses from £18bn to £5.5bn – although Chancellor will give greater help to power-thirsty manufacturers

• Jeremy Hunt confirms he will slash energy bills help for businesses from April
• Chancellor says support package will be reduced from £18bn to just £5.5bn
• He had already warned of ‘unsustainably expensive’ cost of current scheme

Jeremy Hunt tonight confirmed he will slash energy bills support for businesses at the end of March.

The Chancellor announced the current package of assistance – worth £18billion over six months – will be cut to just £5.5billion for the 12 months from April.

Firms had been braced for a significant reduction in support after Mr Hunt last week warned the current level of Government help was ‘unsustainably expensive’.

The Treasury has now revealed the Energy Bill Relief Scheme – which launched in October and ends on 31 March – will be replaced by the less generous year-long Energy Bills Discount Scheme from April.

Under the new scheme, businesses, charities and other non-domestic energy users will be given a discount of up to £6.97 per megawatt hour (MWh) of gas and £19.61 per MWh of electricity.

This contrasts to the current scheme, which caps wholesale energy prices for businesses.

Mr Hunt also promised a ‘substantially higher level of support’ under the new scheme for energy-intensive industries, such as manufacturers.

There was a mixed reaction from business groups to the Treasury’s announcement, which was welcomed by the Confederation of British Industry (CBI) who said it would ‘provide respite for many firms’.

But the Federation of Small Businesses (FSB) described the new scheme as a ‘huge disappointment’ and claimed the Government would ‘inevitably’ have to rethink the ‘totally insignificant’ support being offered fo firms from April.

Jeremy Hunt has confirmed he will slash energy bills support for businesses at the end of March

Under the new scheme, businesses, charities and other non-domestic energy users will be given a discount of up to £6.97 per megawatt hour (MWh) of gas and £19.61 per MWh of electricity

Martin McTague, the national chair of the Federation of Small Businesses, delivered a withering verdict on the Treasury’s new scheme

Mr Hunt has also written to regulator Ofgem to ask whether further action is needed to make ease problems for firms over energy pricing and the availability of tariffs.

The Treasury defended the slashing of support for businesses from April by highlighting how the £18billion cost of the current scheme is equivalent to an increase of around 3p on people’s income tax.

It also pointed to latest data showing wholesale gas prices have now fallen to levels just before Russia’s invasion of Ukraine and have almost halved since the current scheme was announced. 

Mr Hunt said: ‘My top priority is tackling the rising cost of living – something that both families and businesses are struggling with.

‘That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.

‘Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine.

‘But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead.’

Tom Thackray, the CBI’s director for decarbonisation policy, said it was ‘unrealistic to think the scheme could stay affordable in its current form’.

He added: ‘The Government has done much to protect businesses through the energy crisis.

‘It must remain open, flexible and pragmatic in its approach to volatile wholesale energy markets as the year unfolds.’

Martin McTague, the FSB’s national chair, delivered a withering verdict on the Treasury’s new scheme.

‘Today’s decision to all but eliminate help through the Energy Bill Relief Scheme is a huge disappointment for small businesses,’ he said.

‘For those struggling, the discount through the new version of the scheme is not material. Many small firms will not be able to survive on the pennies provided through the new version of the scheme.

‘This is so out of touch. Two pence off a kwh of electricity and half a pence of gas is totally insignificant for small businesses, despite costing billions to the taxpayer. The Government will inevitably have to come back.’

Labour’s Abena Oppong-Asare, a shadow Treasury minister, claimed the new scheme was a ‘sticking plaster’ and criticised a delay to Mr Hunt’s announcement.

The Government had infuriated firms just before Christmas by postponing an expected announcement on further support until the New Year. 

Ms Oppong-Asare said: ‘It is criminal that the sticking plaster politics has forced British businesses into the same cycle – firms unable to plan, not knowing what the next month will bring, let alone the next quarter.

‘Business owners and their staff have faced two Christmases racked with worry because of Covid and half-baked announcements from this Government.’

Sarah Olney MP, the Liberal Democrats’ business spokesperson, claimed there ‘could not be a worse time’ for the Government to reduce support.

‘For many businesses this will just mean another cliff-edge months down the line – they need real, meaningful and lasting support now,’ she said.

Mr Hunt had already used his Autumn Statement last year to announce that Government support for households with their gas and electricity bills will be reduced from April.

Source: Read Full Article