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Major update to £18bn energy bill help as support cut by billions
A MAJOR update to energy bill help for businesses was announced this evening.
Government support for firms will be slashed by billions of pounds from April in a bid to try and slim down the cost of the scheme.
The Treasury announced plans for another £5.5billion of energy bill help with eye-watering bills for firms, charities and the public sector for another year - lasting until April 2024.
This will be a new programme, starting in April, called the "Energy Bills Discount scheme".
But the new fund will be two thirds less than the previous £18billion bailout and takes away the total cap on prices.
Firms will receive a discount on each unit of gas and electricity - rather than the current system which sees a set price per unit.
And it means businesses which locked into fixed-price deals last year will be stuck with higher costs.
However, today's news won't affect everyday household bills, as there is a separate scheme capping average energy bills.
That currently stands at £2,500, but will increase to £3,000 in April.
Last night worried business leaders accused ministers of leaving them "out in the cold" last night after the news.
And one in four say they will have to either close, downsize, or radically change their business model when the Government reduces energy support, the FSB said.
Government insiders privately fear that the help will not be enough to stop hundreds of firms going bust.
Last week Chancellor Jeremy Hunt warned the current package of support wasn't sustainable for the taxpayer.
But he promised energy-intensive industries like manufacturing would get extra support - with up to 70 per cent of their used energy getting a discount.
He said last night: “Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine.
"But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead."
Savings were seen at the end of last year as Brits turned down their heating to cut bills, and a warmer than expected winter.
The Treasury coffers have saved £260million, and families have clawed back a total of £600million across the country, according to BFY Group.
Last night Mr Hunt wrote to regulator Ofgem to complain that firms are not passing on huge drops in prices to customers.
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And he wants an update on their review into the energy market before the March Budget to see if tough new laws are needed to ensure customers are getting a big deal.
Last night, Craig Beaumont head of policy at FSB said: "Small firms have been left out in the cold.
";Help of 1-2 pence off a KWH cost of 30, 40, or 50p is not going to touch the sides.
"After all that COVID investment to help small firms survive, it makes little sense not to help them now."
Tom Thackray of the CBI added: "Some firms will undoubtedly still find the going hard.";
Energy intensive industries warned they had no choice but to keep paying increased energy costs.
Cold Chain Federation Chief Executive Shane Brennan said: “The changes to the scheme leave businesses across the food supply chain at the mercy of a volatile market.
"If cold chain operations fail, everyone suffers."
Wholesale prices have tumbled in recent weeks, but are still double what they were in previous years.
Bank of England Chief Economist, Huw Pill, said last night that higher gas prices could bake higher inflation in for even longer.
He explained: "The longer that firms try to maintain real profit margins and employees try to maintain real wages at pre-energy price shock levels, the more likely it is that domestically generated inflation will achieve its own self-sustaining momentum even as the external impulse to UK inflation recedes."
What help can I get for the cost of living?
Energy bill discount - worth £400
Millions of households started receiving a £400 energy bill discount from October 1.
The payment will be dished out by your energy supplier and will be split across six discounts between October and March next year.
Cost of living payment - worth £650
Millions of households have been paid the first part of their £650 cost of living payment.
The payments aim to help hard-up households to help them with spiralling bills and essentials.
Warm Home Discount - worth £150
Millions of households will get a £150 discount on their energy bills between December and March 2023.
Pensioner Cost of Living Payment - worth £300
In November, a £300 one-off "Pensioner Cost of Living Payment" was paid out to eight million households.
It was given to those who already get the Winter Fuel Payment, worth between £100 and £300 for those over state pension age.
Household support fund - worth £180
Local councils are giving out cash to help households struggling with bills and other essential costs.
How much you can get depends on where you live and in many areas.
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Cold weather payments - £25 a week
Low-income households can get a £25 payment when temperatures plummet.
These cold weather payments have already been made in several locations where residents have experienced below-zero weather.
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