Energy bills for UK businesses will be cut says Business Secretary

Energy bills for UK businesses will be cut by around half their expected level this winter under a huge government support package.

The Energy Bill Relief Scheme will fix gas and electricity prices for all firms for six months from 1 October.

Hospitals, schools, charities and other settings such as community halls and churches will also get help.

It comes after the government announced a £150bn plan to help households with their soaring bills for two years.

It is hoped the latest support will avoid mass bankruptcies and job losses across industries.

Dorchester Chamber President Peter Greenaway said: “Whilst we are waiting for full details of the support offered to business during the energy price crisis, it is pleasing to see that prices will be capped in a similar way to those for domestic use for a 6 month period from 1st October.  I am sure you are all aware that the start may be delayed until November but it will be backdated until October.  The scheme looks likely to be reviewed after 3 months and may be extended for some “vulnerable businesses” although that has yet to be defined, so should provide some comfort to cover the Christmas and winter period.  One of the concerns expressed is that, being for a period of 6 months, the scheme does not provide long term comfort for businesses who may face increases at the end of the 6 month period.”

Vice President Steve Bulley added: “Our members will welcome this announcement although many have expressed concerns to me that this is only a short-term offer.  Without substantial reform to the energy market in the UK there is a risk that this temporary measure will prove to be inadequate.  We are also calling for increased targeted support for sectors like engineering and hospitality who use substantial amounts of energy”.

Officials have not put an overall price tag on the latest subsidy to firms as the ultimate cost will depend on what happens to the wholesale market price between October and April, when the support expires.

Under the scheme, revealed by the Department for Business, Energy and Industry, wholesale prices are expected to be fixed for all non-domestic energy customers at £211 per MWh for electricity and £75 per MWh for gas for six months.

It’s understood the scheme will be reviewed after three months with an option to extend support for “vulnerable businesses” – but it is not known what sectors come under the category.

Firms do not need to contact suppliers as the discount will automatically be applied to bills and savings will be seen from October’s bills but received in November.

The scheme will apply to fixed contracts agreed on or after 1 April and variable and flexible tariffs and contracts.

Prime Minister Liz Truss said the government understood the “huge pressure businesses, charities and public sector organisations are facing with their energy bills”.

“As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind,” she said.

“At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”

Read more detailed information from the government website:

Responding to the release of further details from Government on the energy support plan for business, Shevaun Haviland, Director General of the BCC, said:

For months we have been calling for Government intervention to help businesses with eye watering energy costs. This support package is significant and will ease the cost pressures that have been piling up on businesses.

“It will allow many firms that were facing closure, or having to lay off staff or reduce output, to keep going through the winter.

“But the exact level of support will vary greatly from business to business depending on the detail of its contract, so some will inevitably do better than others.

We now need action to get this saving passed onto business as soon as possible – every day will put some firms closer to the edge and they cannot hang on much longer.

There must also be effective legal oversight to ensure no firms that are due this money miss out.

For those that will benefit, six months support is not enough for most firms to make plans for the future.

We understand there are a range of unknowns for the Government in looking ahead, but without that reassurance very few firms will make plans to invest or grow. 

Some businesses will still struggle to meet their bills despite this government intervention, the Chancellor must prioritise those firms in his mini-budget on Friday.

There are a range of other challenges that must be addressed including labour shortages, supply chain disruption, and rising raw material costs.

“To truly revitalise our economy for the difficult months ahead then there must be a clear long-term plan that gives business the confidence to grow.

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Original source BBC news.