Business energy bills to be capped for 6 months, government confirms

Energy bills for businesses, charities and the public sector are to be capped for 6 months from October the government has confirmed.

Shops and independent local pubs will be among a smaller number of businesses who will also receive longer-term help, Liz Truss indicated.

The chancellor Kwasi Kwarteng said the government had “stepped in to stop businesses collapsing, protect jobs, and limit inflation” this winter.

The measure, for all non-domestic energy users, will cut the expected wholesale price in half.

There had been fears the complex scheme, designed to deal with soaring prices, would be delayed until November - and payments would have to be backdated.

But the government has said it will start on October 1.

Within minutes of the announcement, business leader warned 6 months of help would not be enough.

Shevaun Haviland, Director General of the British chambers of commerce, said: “Six months support is not enough to make plans for the future.“We understand there are a range of unknowns for the government in looking ahead, but without further reassurance very few firms will make plans to invest or grow.”  

Kate Nicholls, from UK Hospitality, said her organisation would “continue to work with the Government, to ensure that there is no cliff edge when these measures fall away”.

Labour said the support had come too late for some firms.

Shadow business secretary Jonathan Reynolds said: "It is farcical that the Tories have been unable to tell businesses at the sharp end of the energy crisis what they plan to do to help them until now.

"Businesses have been crying out for detail on these plans and, even now, there are still questions about how much this will cost and who will pay for it.

"We have known a crisis of this scale has been coming for months and Conservative dither and delay has forced too many businesses to close, with the future still looking bleak.”

The savings will be seen first in October energy bills, which are typically received in November.

Ms Truss said ministers understood businesses were “very concerned” about the level of their energy bills.

The scheme would “make sure that businesses are able to get through the winter,” she pledged.

"We’re going to review it after six months. We’ll make sure that the most vulnerable businesses like pubs, like shops, continue to be supported after that," she added.

Business groups and Tory MPs had warned the scale of the package would have to be “huge” to save the High Street this winter. Many businesses have reported projected increases in their energy costs of more than 500 per cent and some have already been forced to close.

Martin McTague, from the Federation of Small Businesses, said ministers had delivered “decisive action”.

“Now it’s up to energy retailers to live up to the high bar set today and make sure this help reaches those on the ground,” he added.

Jonathan Geldart, the director general of the Institute of Directors, said further relief had to be “targeted at those industries and sectors whose survival is most threatened by current economic conditions”.

The Food and Drink Federation CEO Karen Betts said that although some aspects of the scheme were “still to be clarified, it offers relief to food and drink manufacturers across the UK”.

Stephen Phipson CEO of Make UK, the manufacturers’ organisation said the announcement of a three-month review to decide which businesses were in need of more help in the longer-term was “reassuring” with prices likely to remain high for many months to come.

On a trip to a United Nations summit in New York on Tuesday, the prime minister said skyrocketing energy bills were a “price worth paying” to ensure the UK’s “long-term security” after Russia’s invasion of Ukraine caused costs to spike.

Before the aid was unveiled Guy Adams, who runs the Isle of Barra Beach Hotel in the Hebrides, said he had been quoted a 377.6 per cent increase in his energy bills which “would probably most likely have finished us off”.

He told BBC Radio 4’s Today programme: “It would not have just been that one bill, all our suppliers would have been getting roughly the same.

“The charges would have gone to such an extent where at present our cheapest room rate is £110 per night, we would have had to raise that to £415 per night - literally that would be the cheapest rate and there just aren’t people who would pay that sort of money.”

But he warned a six month review was “not practical”.