Business will learn details of cuts to government energy bill support TODAY after Chancellor Jeremy Hunt warns current £40billion scheme is ‘unsustainably expensive’ with fears many firms face going bust
- A new scheme to underwrite bills will be announced this afternoon in Parliament
- Chancellor Jeremy Hunt warned current system was ‘unsustainably expensive’
- Gas and electricity costs underwritten for six months at a cost of around £40bn
Business will find out today how much further help they will get with energy costs this year amid claims many firms could go bust without sizeable support.
A new scheme to underwrite bills will be announced this afternoon, but is expected to be significantly less than the current system after Chancellor Jeremy Hunt warned it was ‘unsustainably expensive’.
Under the scheme that started in October, some gas and electricity costs for businesses are being underwritten by the Treasury for six months at a cost of around £40billion.
It ends at the start of April and Mr Hunt has already committed to extending it, but delayed an announcement on the details to now from before Christmas.
Sources said the replacement will give a discount on wholesale prices, not a fixed price, with very heavy energy-using sectors – such as steel, glass and ceramics industries – getting a larger discount than other businesses.
The revised scheme is expected to offer help with bills for a further year, until March 2024.
A new scheme to underwrite bills will be announced this afternoon, but is expected to be significantly less than the current system after Chancellor Jeremy Hunt warned it was ‘unsustainably expensive’.
Under the scheme that started in October, some gas and electricity costs for businesses are being underwritten by the Treasury for six months at a cost of around £40billion.
No 11 has rolled the pitch for the levels of support to be scaled back, arguing the current scheme cannot be sustained forever.
Mr Hunt last week told business leaders the level of support was unsustainable and reiterated it was always limited to run for six months.
Extending the scheme in its current form could ‘cost tens of billions of pounds’ depending on wholesale energy prices, he argued.
The Government’s Bill may also be cut thanks to sharp recent falls in wholesale energy prices, driven by unseasonably warm weather, which has reduced the amount of gas that households and businesses need to use for heating and allowed European gas reserves to hold up well.
The support package covers not just businesses, but also charities and public-sector organisations, including schools and hospitals.
Households have already been told their bills will be capped until April 2024, albeit at a higher rate of £3,000, up from the current £2,500 annual cost, while firms have been kept waiting to hear what will be available to them.
Mr Hunt had promised to give firms certainty over future plans for support by the new year, saying last month the announcement would come just before or just after Christmas.
Mr Hunt said at his autumn budget in November that the Government would have to target support only at the most vulnerable industries and would likely also have to lower the aid they receive.
Business groups railed against the plans, warning over job losses and company failures if universal support is withdrawn.
While ongoing help for companies is set to be welcomed, there are concerns over a drastic cut to support.
Rises in energy bills will come at a difficult time for firms as the UK faces a predicted painful and prolonged recession, with consumer spending coming under severe pressure amid the cost-of-living crisis and workers demanding higher wages.
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