After warning that the existing level of assistance was too expensive, the government will reduce support for companies with energy costs.
Instead of having their costs capped as they do under the current plan, businesses will receive discounts on wholesale pricing under the new one.
Steel, glass, and other heavy energy users will receive a higher discount than other industries.
However, businesses will only profit from the program when energy costs are high.
While some business organizations applauded the announcement, others cautioned that it fell short for companies dealing with skyrocketing prices.
A cap has been placed on the new program, which will operate through the end of March 2024. This is an effort to lessen the amount that taxpayers will be exposed to rising expenditures.
The energy support program is mostly employed by enterprises, but it is also utilized by nonprofit organizations, public sector institutions including schools and hospitals, and charities.
After costs rose as a result of the epidemic and the crisis in Ukraine, the government first introduced the package in September of last year.
Although they are currently higher than their long-term average, wholesale gas prices are still three to four times higher than they were prior to Russia’s invasion.
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The government announced that it would reduce its energy subsidies to £5.5 billion for the upcoming fiscal year.
The present plan, which the chancellor had referred to as “unsustainably expensive,” was expected to cost approximately £18.4 billion in just six months, according to official projections.
‘As much support as we are able’
The rising cost of living is a problem that both families and businesses are facing, according to Chancellor Jeremy Hunt
That entails making challenging choices to reduce inflation while providing as much assistance to individuals and businesses as we are able.
According to a statement, bills will automatically be lowered by up to £19.61 per megawatt hour (MWh) for electricity bills and up to £6.97 per MWh for gas rates.
The exchequer secretary to the Treasury, James Cartlidge, stated in the House of Commons on Monday that this amounted to about a £2,300 pub savings.
Big factories, whose expenditures are normally significantly higher, will get a bigger discount, which works out to around £700,000 in support over a year, the government said.
Because of their global competitors, these companies, according to the Treasury, will get greater assistance because they are less able to pass on increasing costs to customers.
Black Sheep Brewery CEO Charleen Lyon, however, claimed that the new programme was “disappointing” even though her company qualifies for additional assistance because to its energy-intensive nature.
For us and for everyone else, energy prices will continue to rise, she told the BBC. You’re talking about an increase of about £200,000 annually, and many businesses, including our own, cannot sustain that.
Mr. Hunt claimed he had also complained in writing to the energy authority, Ofgem, about businesses that weren’t giving customers discounts.
the chairman of the board of
The company, which operates 43 pubs in England and Wales, has forced to close some of them during particular hours of the day because the expenses are simply too high.
He said that the business had postponed growth plans until there was more certainty, saying thatconfidence would not return “unless we see bills at the levels we saw them at last year.”
Businesses have expressed concern about a “cliff edge” if there was no more support for rising costs, which may result in job losses and bankruptcies.
Although it was “unrealistic to believe the scheme could remain inexpensive in its current shape,” Tom Thackray of the business lobbying organisation CBI recognised that.
The increased support for these businesses is especially welcome, he said, as heavy energy consumers and companies who are exposed to international commerce are among some of those who are most affected by the current crisis.
However, it also means that some companies may be stuck with greater prices after locking in fixed-price contracts last year.
The announcement was called a “major disappointment” by the Federation of Small Businesses.
Its national head, Martin McTague, said: “The pennies offered under the current form of the plan would not be enough for many small businesses to survive.
“While the New Year should be a time of optimism and joy, for many of small enterprises that have relied on the government, 2023 appears to be the beginning of the end.