In a blow to business owners across the UK, the Treasury has announced that energy bill support will be slashed in March when the current scheme expires.
As businesses continue to grapple with rapidly rising energy bills, thousands of companies will no longer qualify for government support.
The Guardian reports that transitional support totaling £5.5 billion will be made available for an additional 12 months from 1st April 2023.
What Type of Businesses Qualify for Energy Bill Support in 2023?
The new scheme, which will offer discounts on wholesale prices, differs to the existing initiative as the unit cost for electricity and gas will no longer be capped.
Non-domestic energy consumers – such as schools, charities and businesses – will receive a discount of £19.61 a MWh for electricity and £6.97 a megawatt hour for gas.
Large manufacturers who would struggle to pass on costs to customers, due to competition from abroad, are expected to receive higher levels of support worth up to £7,000.
However, not all British businesses will qualify for the transitional support.
Companies with energy costs lower than £302 a MWh for electricity and £107 a MWh for gas will no longer receive help from the government.
There is no hiding from the fact that small businesses will be impacted most by the government’s policy change.
Rather than giving SMEs as much time as possible to prepare for depleting levels of support, the Chancellor of the Exchequer, Jeremy Hunt, left business owners hanging before the new year.
Unable to sufficiently budget for 2023 at the backend of last year, small businesses are now scrambling to plug a now growing funding gap for the year ahead.
The Exchequer Secretary to the Treasury, James Cartlidge, explained on Monday that in the face of government funding for the furlough scheme, Covid-19 vaccination programme and support for Ukraine, the government should not be expected to habitually pay the bills of businesses.
Whether you agree with that in principle or not, there’s no hiding from the fact that small businesses – already struggling from the shockwaves produced by the cost of living crisis – now could find themselves in financial peril.
Such sentiment was shared by Martin McTague, the national chair of the Federation of Small Businesses.
Responding to the government’s announcement, McTague said: “For those struggling, the discount through the new version of the scheme is not material. Many small firms will not be able to survive on the pennies provided through the new version of the scheme.”
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