Treasury announces reduced energy support scheme for businesses

The Government has announced a new set of support for non-domestic energy customers that will extend past April.

The support is less generous than what had come before, but will give businesses and other organisations some kind of help. But what help will they get, how’s it different to before, and who will get it?

Who is eligible?

All organisations that were eligible under the current set of support will continue to see their energy bills cut automatically from the start of April. This will include businesses, voluntary sector organisations, and public sector organisations.

What will they get?

The eligible organisations will see their energy bills discounted automatically by the Government, working with their energy supplier. The plan will take up to £6.97 off bills for every megawatt hour (MWh) of gas that an organisation uses, and £19.61 per MWh off electricity bills.

This discount will only kick in when gas prices are more than £107 per MWh for gas and £302 per MWh for electricity. If bills are lower then businesses will not get any support.

How long will it last?

The new scheme will add an extra 12 months of support, running from the start of April this year to the end of March 2024.

Are there any special cases?

So-called “energy and trade intensive industries” will be allowed extra support under the scheme.

These businesses are eligible for a maximum £40 per MWh of gas and £89.10 per MWh of electricity.

How much will it cost?

The new scheme is expected to cost around £5.5 billion over the 12 months that the scheme lasts. This is considerably less than the £18 billion that is expected to have been paid out in the six months that the old scheme lasted.

Why has it changed?

Ministers did not want to keep shelling out billions of pounds each quarter to help the businesses with their bills. Chancellor Jeremy Hunt called it “unsustainably expensive”.

The new system will still be expensive, but far from the £18 billion that the old scheme is estimated to cost the Treasury over six months.

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.”