The UK government has confirmed that it will slash business energy bills in half, in a bid to prevent firms collapsing over the winter period.
Jacob Rees-Mogg, business secretary, said the new Energy Bill Relief Scheme will cap how much companies can be charged for energy, which will last for six months and be applied directly to companies’ bills.
The move limits bills at £211 per MWh for electricity and £75 per MWh for gas, and also removes green levies.
It is due to come into effect on 1 October until 31 March 2023, and also applies to contracts signed since 1 April 2022.
The support package will cut energy prices for not only British business, but also charities and public-sector organisations such as schools and hospitals, the Department for Business, Energy and Industry (BEIS) said.
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Rees-Mogg said the support will “reduce the burden of rising energy bills, protect jobs and promote growth.”
He added: “We have seen an unprecedented rise in energy prices following Putin’s illegal war in Ukraine, which has affected consumers up and down the country and businesses of all sizes.”
A parallel scheme will be established in Northern Ireland, while the government will provide equivalent support to non-domestic consumers who use heating oil or alternative fuels instead of gas.
Businesses are the beating heart of the British economy.
Today we are announcing support for businesses, charities and public bodies, which will reduce the burden of rising energy bills, protect jobs and promote growth.https://t.co/qqqKFE4qbR pic.twitter.com/YEZxYaGIn5
— Jacob Rees-Mogg (@Jacob_Rees_Mogg) September 21, 2022
It comes just weeks after the government capped household energy bills at £2,500 per year for two years.
Prime minister Liz Truss said: “As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.
“At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”
The news was welcomed by an array of business groups across the country, including the British Beer and Pub Association, the British Chamber of Commerce (BCC), and Make UK.
Kate Nicholls, chief executive of UKHospitality, said: “This intervention is unprecedented and it is extremely welcome that the government has listened to hospitality businesses facing an uncertain winter.
“We particularly welcome its inclusiveness – from the smallest companies to the largest - all of which combine to provide a huge number of jobs, which are now much more secure.”
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However, there were still calls for more to be done.
Douglas Grant, group CEO at Manx Financial Group, said: "Our research recently revealed that 22% of UK SMEs that needed external finance and/or capital over the last couple of years, were unable to access it.
"Indeed more than a quarter have had to stop or pause an area of their business because of a lack of finance."
He added: "SMEs continue to struggle with accessing finance and that worryingly, this lack of availability is costing them and the UK economy in terms of growth at a time when it is needed the most. The amount of growth that is being sacrificed is significant and will require new solutions which are designed to address this funding gap."
Meanwhile, gas prices rose on Wednesday morning after Russian president Vladmir Putin announced the partial mobilisation of Russian forces in Ukraine.
The wholesale month-ahead UK gas price has climbed 6% to 335p per therm, twice as much as a year ago.