Government reveals energy help for businesses
The Government has revealed its plans to help businesses cope with the energy crisis.
It has set a cap of 21.1p per kWh for electricity and 7.5p per KWh for gas. Wholesale costs this winter are forecast to be 60p and 18p respectively.
The cap will run for six months from October 1 and will apply to fixed contracts agreed on or after April 1, as well as to deemed, variable and flexible tariffs and contracts.
The Energy Bill Relief Scheme applies to businesses, public and third sector organisations. The cap will be automatically applied to bills, with suppliers then compensated by Government.
The Government has not released an estimate of the cost of the scheme, which will depend on the wholesale market price between October and March.
The measures were announced ahead of Friday’s mini-Budget, when Chancellor Kwasi Kwarteng is expected to announce a range of measures to ease the pressure on businesses and households.
New Business Secretary Jacob Rees-Mogg said there had been “an unprecedented rise in energy prices following Putin’s illegal war in Ukraine”, although the wholesale price of gas was already around four times higher in January – before the invasion – than a year earlier.
Rees-Mogg added: “The help we are already putting in place will save families money off their bills, and the Government’s plans for businesses, charities and public sector organisations will give them the equivalent level of support.”
Stephen Phipson, chief executive of manufacturing group Make UK, welcomed the “timely announcement” but warned more will soon need to be done.
He said: “Government has delivered a scheme which is simple to understand, giving reassurance to the business sector. However as appear prices will likely remain high for many months to come, industry will need support for a longer period to protect jobs and remain competitive, so the further announcement of a review on future support at the 3 month stage is reassuring.
“We hope that this support can be made tangible as quickly as possible and not applied retrospectively at the end of the next quarter.”
Jonathan Geldart, Director General of the Institute of Directors, added: “We look forward to working with the government in the coming months to ensure that further relief is targeted at those industries and sectors whose survival is most threatened by current economic conditions.
“Ultimately, however, business and government will need to work hand in hand to develop domestic energy sources and reduce consumption and dependency on expensive fossil fuels.”