In general, business groups applaud the energy bill assistance program, but the majority think that further aid will still be required to assist businesses to survive the harshest winter in recent memory.
The government has declared that, during the winter months, wholesale energy costs for enterprises will be reduced by as much as fifty percent.
They will receive government-funded energy bill reductions comparable to those already announced for homeowners.
The extent of the discount will depend on what enterprises are currently paying, however, Cornwall Insight, a reputable market analyst, stated that the scheme provided a 45% discount on last week’s closing wholesale energy prices.
It was estimated to cost the public £25 billion.
Similar to the energy price guarantee for families, which also goes into effect on October 1, this measure effectively caps the unit cost of electricity and gas supplied to businesses.
The energy bill reduction scheme will cap wholesale pricing for electricity at £211 per megawatt-hour (MWh) and gas at £75 per MWh for fixed-term contracts signed on or after 1 April.
According to the government, the maximum discount band for businesses on other contracts, including those with variable rates, will be approximately £405/MWh for electricity and £115/MWh for gas.
The government is working with suppliers to guarantee that all of their customers in England, Scotland, and Wales have the option to convert to a fixed contract or tariff for the duration of the scheme.
It will last for six months, and a review will be conducted after three months to determine if it should be extended or if some sectors require more targeted assistance.
Ministers stated that the package, which also applies to public bodies such as schools, hospitals, and charities, would ultimately assist economic growth by eliminating “unnecessary insolvencies and protecting jobs” while simultaneously helping to keep inflation in check.
The initiatives were not assigned a price tag, but they will undoubtedly result in tens of billions more in government borrowing in the next year.
PM Liz Truss stated regarding the plan: “We are aware that businesses are very concerned about the number of their energy bills; therefore, we are implementing a scheme for businesses that is equivalent to the scheme for households. To ensure that businesses can survive the winter, we will review the scheme in six months.
After that, we will ensure that the most vulnerable companies, such as taverns and shops, continue to receive assistance.
Instead of taxpayers, opposition parties proposed that a more stringent windfall tax on energy generators foot the price.
Sarah Olney MP, a Treasury spokesman for the Liberal Democrats, stated, “This temporary band-aid comes too late for the numerous small firms that have already shut their doors for good because they couldn’t pay rising bills.”
She said, “Support for high streets and public services should be in place for at least the next year, and should include long-term measures to enhance energy efficiency and reduce expenses.”
However, the majority of business organizations argued that extra aid would be required.
The chief executive officer of UKHospitality, Kate Nicholls, stated, “This involvement is unprecedented and greatly appreciated as we head into an uncertain winter with several problems.”
She went on: “The announcement made today will give businesses the confidence to plan for their immediate survival, but we will continue to pursue a more comprehensive approach to protect firms and employment.
“The government still has access to the levers of reduced VAT and corporate rates reliefs, and a comprehensive plan is required to prevent a cliff edge when these policies expire.”
