Energy support for agencies and other firms to be cut from April

The government is, as expected, scaling back support for businesses with energy bills from April.

Under the new and less expensive scheme, firms will get a discount on wholesale prices rather than costs being capped.

Bills will automatically be discounted by up to £6.97 per megawatt hour for gas bills and up to £19.61 per MWh for electricity bills.

Heavy energy-using sectors - not including agencies, obviously - will get a larger discount than others.

The new scheme - which applies to charities and public sector bodies - will run until the end of March 2024, with a limit on total expenditure to reduce liability for taxpayers.

Chancellor Jeremy Hunt says: “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 business 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.

“Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is action is needed to make sure the market is working for businesses.”

The government has given a number of examples of how the discount will operate. One case study - “a small retail shop” in the government’s words - relates most closely to an agency branch.

This says: “A typical small retail store uses 2 MWh of gas and 1 MWh of electricity each month. Under the new scheme, it could receive up to £403 of taxpayer funded support in the 23/24 financial year.”