Treasury to announce reduced energy support scheme for businesses
The Treasury is poised to announce a reduced scheme to support businesses with their energy bills after Chancellor Jeremy Hunt warned existing spending is “unsustainably expensive”.
The new package will be announced to MPs on Monday, with the current cap on the unit cost of electricity and gas for firms set to expire at the end of March.
Sources said the replacement will give a discount on wholesale prices, not a fixed price, with very heavy energy-using sectors getting a larger discount than other businesses.
No 11 has rolled the pitch for the levels of support to be scaled back, arguing the current scheme costing more than £18 billion cannot be sustained forever.
Hunt last week told business leaders the level of support was unsustainable and reiterated it was always limited to run for six months. Extending the scheme in its current form could “cost tens of billions of pounds” depending on wholesale energy prices, he argued.
Business confidence has stagnated and the future remains bleak for small firms struggling against “monumental” inflationary pressures and energy costs, an influential business group recently warned.
The BCC, which surveyed more than 5,600 businesses in November, 92% of which were small to medium enterprises (SMEs), urged the Government to provide clarity over its new energy support package after it “failed” to do so before Christmas.
The survey found that more than a third of businesses expect their profits to decrease over the coming year, higher than the number who expect profits to rise.