Government confirms cut in energy bill support for businesses from April

The government has confirmed it will continue to subsidise businesses’ energy costs until 31 March 2024, but said the rate of support will be reduced from April 2023.

The Treasury said it had provided an “unprecedented” £18b package of support throughout the winter but that it was only intended to be temporary.

From 1 April 2023 a new £5.5b Energy Bills Discount Scheme will be brought in offering a lower level of support.

James Cartlidge, exchequer secretary to the Treasury, said this was a “transitional” scheme and that “no responsible serious government anywhere in the world can permanently shield businesses from this energy price shock”.

From 1 April 2023 until 31 March 2024 business customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97 per mw/h automatically applied to their gas bill and a unit discount of up to £19.61 per mw/h applied to their electricity bill.

The government said this meant a typical pub would see a taxpayer funded discount of up to £2,300 over 12 months.

A higher level of support will be provided to businesses that are “energy and trade intensive”, such as manufacturing. The government did not confirm any other sectors considered part of this classification.

Cartlidge said that the government would eventually remove all government support with energy bills.

He said support had been designed as a “bridge” to help businesses survive but “firms need to adapt and invest in energy efficiency to remain viable” in the long-term.

“It is not for the government to habitually pay the bills of businesses any more than it is for the government to tell businesses how to turn a profit," Cartlidge added.

Martin McTague, national chair of the Federation of Small Businesses, said the reduction in support was a “huge disappointment” and that the government was “out of touch”.

He added “For those struggling, the discount through the new version of the scheme is not material. 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 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.

“While the New Year should be a time of optimism and excitement, 2023 looks like the beginning of the end for tens of thousands of small businesses, which have been relying on the government energy support to survive this winter.”

Both UKHospitality and the BBPA have warned a major cut in support could see many more venues close their doors.

The Prince Regent pub in Herne Hill, London, tweeted that it was facing a 300% increase in its electricity costs in March that would see its bills rise to £6,000 a month.

“After 17 years we will no longer run a viable business,” the pub tweeted.

Hospitality businesses have told The Caterer they have also been refused contracts and charged huge deposits and extra charges by energy suppliers.

Chancellor Jeremy Hunt said he would write to energy industry watchdog Ofgem to ensure falling energy prices were being passed on to companies.

Ofgem said it was aware of the issues and that its priority was to “protect consumers”.

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