UK business warned of delay to state energy support

Companies have been warned by UK government officials that they will have to wait longer than households for help from its £150bn energy package, due to the difficulty of launching a support system before November.

The prospect of weeks of delays is increasingly worrying business leaders, since hundreds of thousands of companies reach the end of their fixed-price energy contracts at the start of October.

Executives have been told in recent meetings with the government of the risk the scheme may not be ready until November, although officials said they still hoped the scheme would go live next month.

“It is not worked through yet,” said one government official. “I don’t know whether it will come in before November. There’s some debate about whether it can be brought forward and happen before then.”

Companies have urged the government to act quickly to help them cover the soaring “costs of doing business”, with lobby groups in sectors such as hospitality and manufacturing saying many businesses are at risk of failure this autumn.

A support package for Britain’s 28mn households, limiting yearly gas and electricity bills to £2,500 on average, will be in operation from October 1.

But a separate scheme for businesses is more complicated, because there is no system for companies comparable to the rolling price cap already operated for households by Ofgem, the energy regulator.

With no existing mechanism in place, ministers and officials are still struggling to work out how to limit companies’ energy bills.

The scheme is likely to require legislation, which could add further delays since parliament is suspended until the Queen’s funeral on Monday and next week breaks for party conference season into October.

Liz Truss, the prime minister, said last week that businesses would be offered a package of help “equivalent” to the help being offered to consumers — for at least six months.

The government would provide energy suppliers with the difference between a new lower price and what energy retailers would otherwise charge business customers.

But while ministers have outlined this broad framework, they have yet to decide on the precise system for implementing it.

Officials have indicated that the plan is likely to involve a subsidy to energy producers that would then be passed to businesses in discounted bills, potentially using a code of practice that would be revised for the purpose.

They have also suggested that it should be possible for companies to exit existing contracts struck at a higher rate earlier this year to benefit from the energy price assistance.

Business leaders are also worried about a looming “cliff edge” in the spring because the full package is due to run out after six months. Beyond that point, the government will provide more targeted support only for industries deemed “vulnerable” — a definition that will be thrashed out in the coming months.

Analysts at the consultancy Cornwall Insight last month forecast that companies renegotiating in October — an important date for contracting fixed-price deals in the business electricity and gas market — would face a fivefold increase in their energy costs without government assistance.

SEFE Energy, Britain’s biggest gas supplier to businesses, said it had been experiencing “a high number of calls” from customers wanting to find out more about the UK government’s support scheme. It has been forced to issue a notice on its website warning that its call handlers cannot provide further details.

Previously Gazprom Energy, SEFE Energy was renamed after being seized by the German government in April from Russia.

A government spokesperson said: “Officials are working at pace to ensure that support is delivered to businesses in a timely manner. Details of the scheme and implementation timings will be announced as soon as able.”