Jeremy Hunt 'to slash energy bills help for firms from £18bn to £5bn'

Jeremy Hunt ‘set to slash energy bills support for businesses from £18bn to £5bn’ under Chancellor’s rethink of help for firms being announced next week

  • Chancellor to unveil review of Energy Bill Relief Scheme in Commons next week
  • Jeremy Hunt has already warned current £18bn cost is ‘unsustainably expensive’
  • He will reportedly slash the level of support to just £5bn in a 12-month extension 

Jeremy Hunt is set to slash the Government’s provision of energy bills support for businesses when he announces a rethink of the help being offered.

The Chancellor is due to unveil the results of a review of the Energy Bill Relief Scheme, which is currently scheduled to end in March, in the House of Commons next week.

During talks with business leaders on Wednesday, Mr Hunt had already warned that the current level of assistance – worth £18billion over six months – was ‘unsustainably expensive’.

But he promised to provide further support to ease firms’ concerns about a ‘cliff edge’, through a complete drop-off in support, in April.

It has now emerged the Chancellor will reduce Government spending on help for firms to around just £5billion under a year-long extension to the scheme.

Under the current scheme, businesses have seen wholesale energy prices on electricity and gas capped at about half the expected market price. 

According to reports, Mr Hunt will alter this from March to provide a discount on bills for firms, rather than an outright cap.

The Treasury is said to be planning for the discount to be offered on the wholesale price of energy at a certain number of pounds per megawatt hour.

The Chancellor is also expected to announce more generous targeted support for energy-intensive industries, such as steel and ceramics, under the new scheme.

Jeremy Hunt is due to unveil the results of a review of the Energy Bill Relief Scheme, which is currently scheduled to end in March, in the House of Commons next week

The Government infuriated firms before Christmas by delaying an expected announcement on further energy bills support until the New Year

Kate Nicholls, the chief executive of UK Hospitality, warned against a ‘very rapid reduction’ in energy bill support

The Telegraph reported that the £5billion cost of the new scheme had been largely agreed across Whitehall, although the exact discount figure had not been fully signed-off.

A senior Government source told the newspaper: ‘The Government is subsiding every household and business with their energy costs.

‘It is not sustainable in the long-run. It means the Government has less space to focus on other priorities like lowering the tax burden. That is the raw reality.’

Firms had already been braced for less generous assistance when the existing scheme ends in March – as Mr Hunt has already reduced energy bills support for households. 

Under the current Energy Price Guarantee for households, which also ends in March, energy bills are capped at around £2,500 per year.

This will then rise to around £3,000 for the 12 months to April next year, under plans to extend the household scheme announced by Mr Hunt at the Autumn Statement.

The Government infuriated firms just before Christmas by delaying an expected announcement on further business support until the New Year. 

Kate Nicholls, chief executive of UK Hospitality, said: ‘Hospitality has been recognised by the Government as a particularly vulnerable sector because of the impacts of Covid lockdowns and rail disruptions from strikes.

‘That means we are much more fragile than other sectors. Half of our businesses are operating at or below breaking even.

‘For our members, energy bills have soared to become the determining cost for whether they are viable or not.

‘Therefore any very rapid reduction in energy bill support will be particularly damaging. We have been making that point to the Treasury for weeks now.’

A Treasury spokesperson said: ‘We are protecting businesses from high energy costs this winter, caused by Putin’s invasion of Ukraine, through the six-month £18 billion Energy Bill Relief Scheme.

‘However, this is very expensive, and we need to ensure longer-term affordability and value for money for the taxpayer.

‘That is why we are currently carrying out a review with the aim of reducing the public finances’ exposure to volatile international energy prices from April 2023.

‘We will announce the outcome of this review in the New Year to ensure businesses have sufficient certainty about future support before the current scheme ends in March 2023.’

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