The cover image of this article is from coastalenergy.ca.

UK Chancellor Jeremy Hunt to Announce Cut in Financial Support for Businesses

UK Chancellor Jeremy Hunt is on the verge of announcing a cut to the financial assistance that was being offered to businesses in order to help with their energy bills. On Monday, he will present the House of Commons with a new scheme that provides support to businesses, charities, and public sector organisations, but at a less generous level.

The original scheme, which commenced in October, capped the unit cost of gas and electricity for businesses until the end of March. The Treasury is looking to replace it with a plan that offers a discount on wholesale prices as opposed to a fixed price. It is likely that industries that are especially energy-intensive, such as steel, glass, and ceramics manufacturers, will receive a bigger discount than those operating in other sectors.

Last week, Hunt consulted industry representatives concerning the scheme, which he characterized as "unsustainably expensive". The government declared that the existing energy scheme is "among the most generous in Europe", but added that "no government can permanently shield businesses from this energy price shock". They estimated that it would require about £18bn for the six months until the end of March.

The new scheme is anticipated to be in effect until March 2024. This should help to avert a "cliff-edge" cessation of support, which has been a matter of concern among businesses. Hunt has also been given a boost by recent drops in gas prices and, if they are maintained till the end of the year, it might alleviate the cost of efforts to reduce energy bills for consumers and businesses.

The Forum for Small Businesses has raised the alarm over smaller companies that have thinner margins and are less able to face the cost of, for example, rising energy bills. In an assessment, done by the British Chambers of Commerce, it was revealed that over a third of firms admitted that they found it difficult to pay for their energy bills even with government assistance. Make UK, an industry group that represents around 20,000 UK manufacturers, said that decreasing financial support would only increase job losses and reduce factory output.

Sources: BBC Business