Energy subsidies for UK businesses slashed

The government has confirmed it will offer less help with business energy bills – the new scheme provides a discount on energy bills until March 2024

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The government has announced changes in its current energy bill support scheme for businesses after spending as much as £18 billion on a six-month package.

From April onwards, help will drop to £5.5 billion and the main reason for this is to limit taxpayers’ exposure to volatile energy markets, the government said.

The new ‘Energy Bills Discount Scheme’ is designed to support businesses, charities and the public sector – these businesses and other non-domestic energy users will receive a discount on high energy bills until 31st March 2024.

For eligible non-domestic customers who have a contract with an energy supplier, the new scheme will mean that they will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill.

The discount will be applied from 1st April to 31st March 2024.

The Treasury explained that this will be subject to a wholesale price threshold of £107/MWh for gas and £302/MWh for electricity, meaning that businesses facing energy costs below this level will not receive support.

Eligible energy-intensive industries will receive a discount reflecting the difference between a price threshold and the relevant wholesale price.

The price threshold for the scheme will be £99/MWh for gas and £185/MWh for electricity.

The government said this discount will only apply to 70% of energy volumes and will be subject to a “maximum discount” of £40/MWh for gas and £89.1/MWh for electricity.

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 businesses as we are able.

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.”