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Mon 9th Jan 2023 - Government confirms energy bills support for businesses to be reduced from April
Government confirms energy bills support for businesses to be reduced from April: Support for businesses with energy bills will be reduced from April, the government has announced. Under the new scheme, firms will get a discount on wholesale prices rather than their costs being capped as under the current one. Heavy energy-using sectors such as manufacturers will get a larger discount than others, but firms paying under a certain price for their energy wholesale will not get support. The new scheme will run until the end of March 2024. Former chancellor Kwasi Kwarteng introduced a price cap on energy bills for businesses in his mini-Budget in September in the face of concerns over rocketing energy prices. Wholesale gas prices are now below the level they were before Russia’s invasion of Ukraine, but still three to four times higher than their long-term average. In its announcement, the government said it was scaling back the energy subsidies for the next financial year to £5.5bn. The current scheme had been described as “unsustainably expensive” and was predicted to cost about £18.4bn, according to official forecasters. Chancellor Jeremy Hunt said: “My top priority is tackling the rising cost of living, something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.” Industry leaders have previously warned support with energy bills would be needed beyond April to prevent businesses going to the wall. Responding to today’s announcement, Emma McClarkin, chief executive of the British Beer and Pub Association said: “We are very disappointed by the Treasury’s announcement, which will mean a dramatic drop in extended energy support relief for pubs come April. While the government has accepted the need for continued energy bill support for another 12 months, the reduction in the level of this support is extremely worrying and comes at a time of acute pressure on pubs. We are aware of the pressure that public finances are under, but energy costs are the single biggest threat to the industry right now to once strong healthy businesses.  Significant price increases will be the last straw for businesses who have been struggling for three years to remain solvent and serving their communities.” Martin McTague, national chair of the Federation of Small Businesses (FSB), added: “Today’s decision to all but eliminate help through the Energy Bill Relief Scheme (EBRS) is a huge disappointment for small businesses. Many small firms will not be able to survive on the pennies provided through the new version of the scheme. 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. The current EBRS scheme provides certainty for a small business owner over their rates and has made a material difference to the survival of many small businesses. The replacement scheme will do neither.”

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