Businesses ‘will start shutting down’ warns Komolafe
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The scheme will fix wholesale gas and electricity prices for firms for six months from October 1, shielding businesses from crippling costs. Hospitals, schools and charities will also get help, the Government said. It comes after ministers announced a £150billion plan to help households with their soaring bills for two years. Overall the two schemes could cost a mammoth £200billion.
Industry groups welcomed the package but warned further support may be needed after the winter.
The scheme will be reviewed after three months with an option to extend targeted support for “vulnerable businesses” – but it is not known for what sectors.
The Government will foot part of an organisation’s bill if the wholesale price of gas and electricity stays above a set level.
The support will work differently depending on what kind of energy tariff an organisation is on.
Wholesale prices, which are what suppliers pay for energy in bulk before they distribute it to customers, are expected to be fixed for all non-domestic energy customers at £211 per MWh for electricity and £75 per MWh for gas.
Those rates will be the base cost, to which other add-ons, such as standing charges will be added by suppliers. Analysts Cornwall Insight said the plan marked a “substantial” 45 per cent discount on wholesale energy prices.
The government said the scheme would apply to companies which had agreed fixed deals at higher prices on or after April 1, when energy bills started to surge.
Those on variable and flexible tariffs will also be eligible.
Companies do not need to contact suppliers as the discount will automatically be applied, with savings seen from October but received from November.
Business Secretary Jacob Rees-Mogg said: “We have seen an unprecedented rise in energy prices following Putin’s illegal war in Ukraine, which has affected consumers and businesses of all sizes.
“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 equivalent support.”
Speaking earlier in New York, Prime Minister Liz Truss said: “I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs.”
Confederation of British Industry chief policy director Matthew Fell said: “We welcome Government’s decisive action to provide hard-pressed businesses with a substantial short-term fix to a long-term problem.”
Kate Nicholls, boss of UKHospitality, said businesses will get “some confidence” from the support, but “we will not relent in our pursuit of a more comprehensive package to safeguard businesses and jobs”. Director general of UK Steel, Gareth Stace, said the price cap would give steelmakers “the chance to get through the winter”.
And Shevaun Haviland, director general of the British Chambers of Commerce, said: “This support package will allow many firms that were facing closure, or having to lay off staff or reduce output, to keep going through winter.”
But she said six months’ support is “not enough to make plans”. Labour’s Darren Jones, who chairs the Business, Energy and Industrial Strategy Committee, said: “Capping the price for all businesses is a waste of taxpayers’ money, which should be targeted at those which need it the most.
“Why should taxpayers collectively get into even more debt to hand over public funds to Amazon?”
Ministers also confirmed households that do not benefit from the Government’s energy price cap will get £100. Homes that use heating oil rather than gas will get the additional £100 on top of the £400 bills discount already announced.
More than 1.5 million homes in the UK rely on heating oil.
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