THE UK Government has promised to help businesses with their energy bills for another year, but significantly reduced the amount of support they will get.
Ministers said that non-domestic customers – which include businesses, charities and schools, among others – would get up to £6.97 taken off their energy bills for every megawatt hour (MWh) of gas they use.
Electricity bills will also be discounted by up to £19.61 per MWh.
The offer is considerably less generous than the support organisations currently get.
The current scheme is set to cost the Government about £18 billion over just six months, compared with £5.5bn over a whole year for the new plan.
On its website the Government said that under the old scheme a pub that uses 16 MWh of gas and 4 MWh of electricity each month could have been given around £3100 per month in support. Under the new scheme the same pub will get £190 per month.
This massive change does not apply to all companies, and depends on when they signed their energy contract.
Martin McTague, the national chair of the Federation of Small Businesses, was not impressed by the policy change
"For those struggling, the discount through the new version of the scheme is not material," he commented. "Many small firms will not be able to survive on the pennies provided through the new version of the scheme.
“This is so out of touch. Two pence off a kwh of electricity and half a pence of gas is totally insignificant for small businesses, despite costing billions to the taxpayer. The Government will inevitably have to come back."
Andrew McRae, the organisation's policy chair in Scotland (above), echoed the comments.
“Small businesses have been calling for some certainty on energy prices for months, but many will be forgiven for wondering whether today’s statement was really worth waiting for," he said.
“This is a significant reduction in support – and it will have real-world impacts.
“Energy costs are still the single biggest challenge for many of our members, with six in ten reporting utilities as the main driver of cost increases. By switching the support from a cap to a discount on wholesale costs, businesses are once again at the mercy of the global events that drive those prices."
Stewart Hosie, the SNP's economy spokesperson, called on the Chancellor to come before the House and outline a long-term vision to help people or "face devastating consequences".
“This was an opportunity for the UK Government to ease the worries for millions of businesses across these islands, but once again failed to deliver," he said.
“Politics is about priorities, and the Chancellor has his all wrong. Instead of outlining a robust and long-term plan which would support businesses through the crisis his party created, he has offered a mere sticking plaster."
Extra support for energy-intensive industries
The UK Government also announced that energy-intensive users, such as some factories that burn a lot of gas, will get extra support.
Those businesses that are eligible will get a maximum discount of £40 per MWh of gas and £89.10 per MWh of electricity. It will apply to 70% of their energy use by volume.
Gareth Stace, director general of UK Steel, welcomed the announcement, but said the extra support for his industry might still not be enough.
“There will be concerns that the newly announced support falls short of that of competitor countries, including Germany,” Stace said.
“Today’s reforms significantly narrow the help that Government will provide, with a maximum discount of £89/MWh, which stops delivering once those prices go beyond a ceiling of £274/MWh.
“The Government is betting on a calm and stable 2023 energy market, in a climate of unstable global markets, with the scheme no longer protecting against extremely volatile prices.”
Chancellor of the Exchequer Jeremy Hunt said: “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.
“Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is needed to make sure the market is working for businesses.”
