Government scales back energy bill support for businesses
Posted on in Business News , Cycles News
The government has announced it is to scale back support for businesses and their energy bills after warning that the current level of help was too expensive.
Under the new scheme, firms will get a discount on wholesale prices rather than costs being capped as under the current one. Heavy energy-using sectors will get a larger discount than others, but firms will only benefit from the scheme when energy bills are high.
The new scheme will run until the end of March 2024, while a limit has been set on it in a bid to reduce how much taxpayers are exposed to spiralling costs. The energy support scheme is mainly used by businesses, but is also for charities, and public sector organisations such as schools and hospitals.
Wholesale gas prices are now below the level they were before Russia's invasion of Ukraine but are still three to four times higher than their long-term average, leaving businesses struggling with soaring costs.
In its announcement, the government said it was scaling back the energy subsidies for the next financial year to £5.5bn. The current scheme had been described as "unsustainably expensive" by the chancellor and was predicted to cost about £18.4bn in just six months, according to official forecasters.
Bills will automatically be discounted by up to £6.97 per megawatt hour (MWh) for gas bills and up to £19.61 per MWh for electricity bills, a statement said.