Energy support for businesses could be halved
Prime Minister Rishi Sunak is set to slash the support given to businesses reliant on the support, which include thousands of pubs and restaurants, according to The Times.
In October last year a six-month package of support for businesses that capped wholesale energy prices on electricity and gas was announced during former prime minister Liz Truss' short tenure, which is expected to cost the Government £18bn by the time it ends on 20 March.
In her address to the Commons at the time, Truss described the hospitality and pub sectors as “vulnerable” and said that the Government was working with businesses to offer more support in the future.
Next month chancellor Jeremy Hunt will announce a 12-month extension to the scheme but the level of support for businesses could be more than halved amid concerns about taxpayers’ exposure to fluctuating energy prices.
Two approaches are being considered. Hunt said in his autumn statement that most businesses would not receive extra support, arguing that it was “not sustainable”. He said that the level of support offered by the Government would be “significantly lower” and focus on the most vulnerable industries.
A targeted approach has proved challenging, however, because many energy companies do not have data about their customers. Ministers are instead looking at a reduced universal scheme, although a final decision has yet to be made. The new scheme is expected to cost less than £20bn over 12 months, compared with £40bn for the existing one. Under the scheme businesses get a discount of up to £345 for a megawatt hour of electricity and £91 for a megawatt hour of gas.
Decision a 'fatal' bow to businesses
The hospitality industry has warned that a steep rise in energy costs combined with the impact of inflation “could prove fatal” for many businesses.
Responding to The Times' report, Sacha Lord, night time economy adviser for Greater Manchester said: "If this U Turn's true, Jeremy Hunt will be responsible for turning the CLOSED sign on 1000's of Hospitality businesses across the whole of the UK."
The Government has already announced a rise in the energy price cap for households, with typical bills rising by £600 from £2,500 to £3,100 in April, a decision which has also come under fire due to a lowering of wholesale energy costs.
"Wholesale gas/oil is now below the price is was before Russia invaded the Ukraine," says Lord. "So why aren't the big energy firms reflecting this? Businesses are going to the wall. Families are having to choose to eat or heat. The Government urgently needs to intervene."
