Prime minister Liz Truss has unveiled plans to cap energy prices for consumers and businesses but there are fears that the timeframe for business support is too short.
UK businesses are to get help with their energy bills this winter as part of a major new package unveiled by prime minister Liz Truss today. However, while a price cap for consumers will be in place for two years, provision for businesses will last for six months, with a review after three months. After that, the government has promised to help the most vulnerable businesses.
From 1 October, under a new Energy Price Guarantee, a typical UK household will now pay up to an average £2,500 a year on their energy bill for the next two years. Households will also get the £400 energy bills discount that was previously announced. The prime minister also promised that businesses and public sector organisations will see "equivalent support" for six months from October.
Prime minister Liz Truss said: "I'm acting immediately so people and businesses are supported over the next two years, with a new Energy Price Guarantee, and tackling the root cause of the issues by boosting domestic energy supply. Extraordinary challenges call for extraordinary measures, ensuring that the United Kingdom is never in this situation again."
Businesses have been faced with the prospect of huge increases in their energy bills - some by as much as 500% - because they have not benefited from an energy price cap and many are not able to fix their energy price.
The new six-month scheme for businesses and other non-domestic energy users (including charities and public sector organisations like schools) will offer "equivalent support as is being provided for consumers" according to a government statement. This will "protect them from soaring energy costs and provide them with the certainty they need to plan their business".
After this initial six-month scheme, the government will provide ongoing, support for vulnerable industries. There will be a review in three months' time to consider where this should be targeted to make sure those most in need get support.
The government will also launch a review to ensure the UK meets its Net Zero 2050 target in an economically-efficient way, without placing "undue burdens on businesses or consumers".
Commenting on the announcement, Jonathan Geldart, director general of the Institute of Directors (IoD), said: "Businesses will welcome this pragmatic intervention which will help firms struggling with eye-watering energy costs plan for the future with greater certainty.
"It is particularly encouraging that the intervention will of itself put downwards pressure on consumer price inflation, which has been top of the business worry list for the best part of a year."
The British Chambers of Commerce (BCC) also welcomed the "quick and positive intervention from government". Director general Shevaun Haviland said: "It is clear the new prime minister has listened to firms and is providing a strong package of support for business, equivalent to the crucial support to consumers. We welcome the breadth of the offer to all non-domestic energy users with businesses, charities and public sector organisations all to be included."
The announcement provides relief in the short term for businesses, but there is long term uncertainty ahead of a review in three months' time. Andrew Goodacre, ceo of the British Independent Retailers Association (BIRA), said "Retailers on every high street will welcome any support, but we still have concerns. Making the energy rate for businesses the same as consumers still imposes a 300% increase on energy bills for many businesses, and that will still cause hardship for those business owners. We also believe that any review over the next six months should have a broader remit of looking at all business costs. There is limited prospect of prices reducing in six months' time, and so we cannot afford to see business rates increase in line with inflation just as this business support comes to an end."
Written by Rachel Miller.