Support for businesses facing soaring energy costs might be extended beyond March next year as the government tries to head off a wave of small company failures.
Jeremy Hunt, the chancellor, kept the scheme in place in his last Budget, but from March said it would apply only to certain vulnerable industries and not be available universally.
In what would appear to be a U-turn on this stance, the FT today reported that targeted aid is being scrapped with a new lower energy cap to be introduced instead.
Currently, the price of electricity in the UK is capped at £211 per megawatt hour (Mwh) and gas at £75 per Mwh.
The report suggested the difficulties in deciding what constitutes a vulnerable sector are behind the change in tack.
Small businesses repeatedly called for more clarity on what will happen in March, with the Federation of Small Business (FSB) among the many trade bodies warning of dire consequences if support is taken away.
Hospitality groups in particular have said there is likely to be a wave of pub and restaurant closures with businesses also facing a rise in business rates as reliefs introduced during the pandemic are wound down.
The FSB meanwhile has suggested that nearly a quarter (24%) of small firms plan to close, downsize or restructure if energy relief ends from next April, the FT reported.
Martin McTague, the FSB’s chair, said earlier this week said: “Our members are telling us their businesses, as well as their staff, are dependent on Government support in this energy price crisis.”
A spokesman for the Treasury said: “A review is currently considering how to support businesses from April 2023, targeting taxpayer’s money to the most affected.”