The business secretary announced on Wednesday plans to slash the cost of gas and electricity for businesses and other non-domestic users for six months from October, a scheme estimated to cost around £40bn.
Business groups said further support would be needed at the end of a “short-term fix”, while small firms voiced fears of a spike in bills in spring, uncertain whether they would be eligible for extra help next year.
The National Association of Head Teachers also warned that schools “do not have any certainty on costs beyond six months”. General secretary Paul Whiteman said “we have real concerns that this just doesn’t go far enough”.
Asked if schools and other groups would still get help in 12 months, Mr Rees-Mogg told Sky News: “Schools and hospitals and care homes are obviously going to [need to] be able to afford their energy in a year’s time as well as today.”
The cabinet minister added: “I can’t announce future schemes, it would be wrong to do so – but we need to make sure that we use this time to find out where the support is needed.”
Mr Rees-Mogg said the cost of the support package would be in the tens of billions of pounds, but that the exact amount was hard to quantify. “This will depend on where the price of energy goes over the winter ... It will be in the tens of billions of pounds, unquestionably.”
Despite Mr Rees-Mogg’s comments on schools, hospitals and care homes, the government insisted that it will not pre-empt the findings of a review due in three months’ time which will identify “vulnerable” sectors would get further support.
The government announced on Wednesday that the six-month scheme could roughly halve the price paid for wholesale gas and electricity by non-domestic customers.
Ministers said a pub using 4 megawatt hours (MWh) of electricity and 16 MWh of gas that signed a fixed-price contract in August could see its bill drop from £7,000 to £3,900. But there was no official estimate of the average saving for businesses, due to the wide variation in consumption and contracts.
While some firms are set to make savings of 50 per cent or more on the sums which would have been demanded in the absence of a support package, most will be paying more than they did last year in cash terms.
Business groups welcomed the announcement of support for this winter, but criticised the lack of detail on which “vulnerable” non-domestic customers will continue to get support beyond six months.
“Six months support is not enough to make plans for the future,” said Shevaun Haviland, director general of the British Chambers of Commerce (BCC). “Without further reassurance very few firms will make plans to invest or grow. Some businesses will still struggle to meet their bills despite this government intervention.”
The Federation of Small Businesses (FSB) warned of “hardship” for businesses who signed energy contracts before April, since they fall outside the scope of the scheme. The FSB’s Tina McKenzie also called for clarity on which businesses would qualify for support after six months.
“Small businesses are the definition of vulnerable when it comes to these energy price hikes,” she said. “There is no such thing as a ‘vulnerable sector’ when all small businesses with premises have been deeply affected.”
The founder of online retail gift company Betsy Benn based in Cheltenham said she is “suspicious” about the six-month plan when the equivalent cap on household energy bills is set to last two years.
Betsy Benn, 47, said: “Purely from a planning point of view, it is really disappointing. If the domestic cap is for two years … so why are they only making a plan for businesses for six months? Six months just doesn’t cut it for any kind of planning solution.”
Dr Jackie Mulligan, an expert on the government’s high streets task force, said the announcement had “come too late for many small businesses”, adding: “Most businesses will also be asking, what happens after six months?”
Labour also said the support had come too late for some firms. “Businesses have been crying out for detail on these plans and, even now, there are still questions about how much this will cost and who will pay for it,” said shadow business secretary Jonathan Reynolds.
Darren Jones, Labour chair of the business and energy and industrial strategy committee, said the plan had been poorly targeted, arguing that capping prices for all businesses was a “waste of taxpayers’ money”. He added: “Why should British taxpayers collectively get into even more debt to hand over public funds to Amazon?”
The Institute for Fiscal Studies (IFS) think tank has previously estimated the cost of the six-month business support package at around £40bn. The Cornwall Insight consultancy estimated the scheme will cost around £25bn, while Investec analyst Martin Young said: “It is hard to estimate the cost to government but we suggest a range of £22bn to £48bn.”
Payments for the scheme will be made by government to energy suppliers, who will be required by law to pass on savings to customers, with the threat of financial penalties if they fail to do so.
Emergency legislation required to make that happen will have to be brought in when parliament returns from its conference recess in mid-October, with savings applied to that month’s energy usage in time for bills landing in November.