Energy Bill Support For Businesses Slashed

Chancellor Jeremy Hunt:
Chancellor Jeremy Hunt:

Chancellor Jeremy Hunt: "Even though prices are falling, I am concerned this is not being passed on to businesses."

The government has significantly reduced the amount of support businesses will get for energy bills as the policy was extended for another year.

The current scheme is set to cost the government about £18 billion over just six months, compared with £5.5 billion over a whole year for the new plan from the start of April, a scaling back of about 85%.

Ministers said that non-domestic customers – which include businesses, charities and schools, among others – would get up to £6.97 taken off their energy bills for every megawatt hour (MWh) of gas they use.

Electricity bills will also be discounted by up to £19.61 per MWh.

Chancellor Jeremy Hunt last week told business leaders the level of support was “unsustainably expensive” and reiterated it was always limited to run for six months.

On Monday, he said: “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.

“Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is needed to make sure the market is working for businesses.”

The plan was welcomed by the Confederation of British Industry, which said it would “provide respite for many firms”.

But the Federation of Small Businesses said the reduced support was “a huge disappointment”.

“Many small firms will not be able to survive on the pennies provided through the new version of the scheme,” FSB national chair Martin McTague said.

The government also announced that energy-intensive users, such as some factories that burn a lot of gas, will get extra support.

Those businesses that are eligible will get a maximum discount of £40 per MWh of gas and £89.10 per MWh of electricity. It will apply to 70% of their energy use by volume.

Although it was welcome, the original energy support package for businesses was always seen as a short-term measure.

It was first announced in September under then prime minister Liz Truss. But while the government promised to support households for two years, non-domestic customers were told their support would run out in just half a year.

At the time then business secretary Jacob Rees-Mogg said there would be more support for companies after that six-month period, but only after a review to see which organisations truly needed the help.