Business' support with energy bills to be slashed from April, government confirms

9 January 2023, 19:19 | Updated: 10 January 2023, 05:59

Businesses will get less support from the government to cope with skyrocketing energy bills from April, ministers have said.

Companies and organisations like schools, charities and churches, will get a discount on their energy bills under the new scheme - rather than having costs capped, as under the current plan.

They will 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.

The scheme, which will run for the financial year to the end of March 2024, will cost £5.5 billion, compared to the current plan, which was predicted to cost more than £18 billion over just six months.

Companies like factories that burn a lot of gas will get extra support from the government.

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

"It's unrealistic to think the scheme could stay affordable in its current form, but some firms will undoubtedly still find the going hard," said CBI director for decarbonisation policy Tom Thackray.

"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."

Chancellor Jeremy 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.

“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.”

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The original energy support package for businesses 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.

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Mr Rees-Mogg said at the time that the Government had to apply a "broad brush" to the problem because urgent action was needed.

In the longer term officials would be able to figure out a more targeted - and therefore cheaper - plan.