Ministers to offer business energy support package until early 2024

Ministers are close to finalising plans for a two-pronged package of support for businesses to help with energy costs all the way through next winter — when prices are feared to rise sharply again — and into spring 2024.

Jeremy Hunt, the chancellor, is drawing up a package that would give low-level universal support to all companies with their energy costs for the next 15 months — while providing extra targeted support to energy-intensive businesses.

This autumn, the government agreed to subsidise an energy price cap for six months under the Energy Bill Relief Scheme but companies had been facing a cliff edge when the scheme ends in late March. Beyond that the state would only subsidise a handful of the most “vulnerable” industries, ministers have repeatedly said.

Hunt’s announcement, which is expected before Christmas, would mark a major shift in the government’s approach to helping businesses with their energy bills, which have soared since Russia’s invasion of Ukraine sent gas prices spiralling upwards.

It reflects jitters at the top of government about the plight of companies having to deal with a leap in energy prices just as the country plunges into economic recession.

Under current plans, all companies would see the per-unit price of energy capped until April 2024, in line with an existing pledge to households.

However, Hunt wants to keep the cost of the package down given the tight squeeze on public finances.

The chancellor has conceded that in order to make the universal support affordable to the government there will have to be a higher price cap than under the existing support package. Energy suppliers will be able to charge a higher maximum price for corporate customers than at present.

On top of this there is expected to be a second, more targeted support package for businesses in vulnerable sectors, such as hospitality, as well as high-energy users in sectors such as steel manufacturing.

Those sectors would receive more generous support, according to several people with knowledge of the discussions.

Officials have told business groups this week that the full package could be announced by the chancellor as early as Tuesday next week, but that the details still needed to be signed off by ministers at Treasury, which declined to comment, and the department of Business, Energy and Industrial Strategy. “It is all still subject to change,” said one official.

With the EBRS due to end in March, businesses have warned that they will need further support to cope with prices next year if they remain as high as many expect.

Those in energy-intensive industries in particular warned over the extra costs when demand is falling as the UK enters recession.

Business leaders have been lobbying for a swift deal to extend the energy support and give companies some degree of comfort over costs when considering investment plans in the new year.

Additional reporting by Nathalie Thomas