UK to cut business energy subsidies by 85% - Telegraph

FILE PHOTO: A farmer works in a field surrounded by electricity pylons in Ratcliffe-on-Soar

LONDON (Reuters) -British government plans to scale back energy subsidies for businesses will see the cost of support fall by 85% during the next financial year, limiting the cost to 5 billion pounds ($6 billion), the Daily Telegraph reported on Friday.

Britain's finance ministry said on Wednesday that the government would announce to parliament next week how it proposes to cut current support, which government forecasters estimate will cost 18 billion pounds in the six months to March.

Finance minister Jeremy Hunt has called the current programme "unsustainably expensive".

The Telegraph reported that under the new plan "the 5 billion pound cost is largely agreed, according to multiple government sources tapped into negotiations".

Britain's finance ministry declined to comment on Friday about whether the 5 billion pound cost estimate was accurate.

"We need to ensure longer-term affordability and value for money for the taxpayer," a finance ministry spokesperson said.

"We are currently carrying out a review with the aim of reducing the public finances' exposure to volatile international energy prices from April 2023."

British natural gas prices began to pick up sharply in the second half of 2021, and soared after Russia invaded Ukraine in February 2022.

Prices have been very volatile since. Although they are now back around the same level as a year ago - and lower than when the current support package was announced - they are still several times higher than in early 2021.

($1 = 0.8388 pounds)

(Reporting by Muvija M and David Milliken; editing by William James and Kylie MacLellan)