Energy bill support slashed for UK businesses

The UK government has earmarked £5.5bn for a new Energy Bills Discount Scheme over one year, which is far less than the £18bn in support given for six months under the previous scheme.

Businesses, charities and the public sector will have access to the new scheme from April, and will receive discounts on energy bills until 31 March 2024.

This comes after an unprecedented support package was provided last year following Russia’s invasion of Ukraine to help businesses cope with spiralling energy prices during the winter months.

However, the government said this was “time-limited” and that wholesale gas prices have now fallen to levels recorded just before the war, arguing that the new scheme “strikes a balance” between supporting businesses and limiting taxpayer’s exposure to volatile energy markets.

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.”

Eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill under the new scheme, and a unit discount of up to £19.61/MWh applied to their electricity bill.

A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries.

Tom Thackray, director for decarbonisation policy at the Confederation of British Industry, welcomed the continued energy discounts for businesses, and said that it would be “unrealistic” to expect the scheme to continue in its current form.

He continued: “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.”

However, Martin McTague, national chair of the Federation of Small Businesses, described the new scheme as “out of touch”, adding: “Many small firms will not be able to survive on the pennies provided through the new version of the scheme.

“The current Energy Bill Relief Scheme provides certainty for a small business owner over their rates, and has made a material difference to the survival of many small businesses. The replacement scheme will do neither.”