'Lifeline' as energy bills for pubs and shops to be capped under 'unprecedented' scheme
21 September 2022, 09:21 | Updated: 21 September 2022, 13:50
The Government has announced it will cap energy bills for businesses from October 1, cutting the expected wholesale price in half.
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Liz Truss said the cap would "make sure businesses have that security through the winter".
Chancellor Kwasi Kwarteng said the measure would protect jobs and help curb inflation.
"We have stepped in to stop businesses collapsing, protect jobs and limit inflation," he said.
"And with our plans to boost home-grown energy supply, we will bring security to the sector, growth to the economy and secure a better deal for consumers."
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The new Energy Bill Relief Scheme provides a discount on wholesale costs for all non-domestic customers.
The Government has set a supported wholesale price - expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter - to cut bills.
The scheme will apply to fixed contracts agreed on or after April 1 this year, as well as to deemed, variable and flexible tariffs and contracts.
It will apply to energy usage from October 1 to March 31.
The savings will be first seen in October bills, which are typically received in November.
The scheme has been welcomed by business bosses
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The Government will push through emergency legislation to underpin the new relief scheme once Parliament returns from its break for the party conferences in October.
For customers on fixed-price contracts, if the wholesale element is above the new Government cap, thed price per unit will be automatically reduced for the duration of the scheme.
Customers with default, deemed or variable tariffs will receive a per-unit discount up to a maximum of the difference between the Government rate and the average wholesale price over the period - the maximum discount is expected to be around £405 per MWh for electricity and £115 per MWh for gas.
For customers on flexible purchase contracts, typically those with the highest energy needs, the level of reduction will be calculated by suppliers, subject to the same maximum discount.
A parallel scheme will be established in Northern Ireland.
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Kate Nicholls, chief executive of UKHospitality, said the scheme was "unprecedented and extremely appreciated", and would give businesses "confidence to plan for immediate survival".
However she said a more comprehensive package was needed to "safeguard businesses and jobs" in the long-term.
"This intervention is unprecedented and extremely appreciated as we head into an uncertain winter with numerous challenges on many fronts," she said.
"The inclusiveness of the supports announced today - covering businesses small and large - will be extremely beneficial to the sector. A sector that provides a huge number of jobs, many of which are now more secure.
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"The Government - and the Prime Minister herself, in her comments in New York yesterday - has singled out the vulnerability that energy costs are inflicting on the hospitality sector.
"Today's announcement will give businesses some confidence to plan for immediate survival but we will not relent in our pursuit of a more comprehensive package to safeguard businesses and jobs.
"The levers of reduced VAT and business rates reliefs are still available to the Government, and there must also be a comprehensive package to ensure that there is no cliff edge when these measures fall away."
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Emma McClarkin, chief executive of the British Beer and Pub Association, said the energy support "will be a lifeline for many pubs and brewers this winter".
But she added: "Whilst this announcement has helped businesses to breathe an initial sigh of relief as they head into this critical period, more support is needed to tackle the cost of doing business and we need a plan beyond the next six months.
"Our industry is one of only a few that supports jobs and livelihoods in every single part of the UK, and we have the potential to deliver growth in every single community we serve.
"On Friday, the Chancellor must take steps to address the cost of doing business, by reducing the tax burden on our sector, allowing pubs and brewers the chance to not only survive this winter, but remain at the heart of local economies and their communities for many years to come."
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The Liberal Democrats have described the Government's scheme to help cut energy bills for businesses as a "temporary sticking plaster" that comes too late for some small firms.
Lib Dem Treasury spokesperson Sarah Olney said: "This temporary sticking plaster comes too late for the many small businesses that already closed their doors for the last time because they couldn't afford soaring bills.
"The Conservatives have sat on their hands for months while treasured pubs, cafes and high street shops went to the wall.
"This delayed announcement will leave our small businesses, schools and hospitals under a cloud of damaging uncertainty. The Government have no plan beyond these next six months, paralysing businesses who need to make decisions for the long term. Support for high streets and public services should be in place for at least the next year and include measures to improve energy efficiency and cut bills in the long term.
"The announcement shows the Conservatives have no plan and no understanding of the pressures facing our businesses and public services."
