Ministers are close to finalising plans for a two-pronged package of energy-bills support for businesses – including extra help for steel manufacturers – according to media reports.
The Financial Times and Sunday Times reported that chancellor Jeremy Hunt is drawing up a package that would give a lower level of universal support for power and heating bills to all companies for up to a year when the existing Energy Bill Relief Scheme (EBRS) ends at the beginning of April.
In addition, it has been reported, extra targeted support will be provided to energy-intensive businesses, such as steelmakers, and other vulnerable sectors, such as hospitality.
Under the EBRS, which was announced in the autumn, the government has provided six months of energy-costs support for non-domestic customers in line with the package that is designed to limit average household bills to an annual level of £2,500.
Last week, UK Steel warned that steel production had been forced to halt temporarily amid spiking energy costs. The trade body said that without more support in 2023, UK steel production would reduce – potentially further pushing up prices for the material, which spiralled throughout 2022.
At the time of last month’s Autumn Statement, Hunt said bills-support for businesses would be reduced “significantly” and subsidies would be targeted at the most “vulnerable” industries. He said that the government would be announcing a review of its support package for businesses before Christmas.
A recent estimate by consultancy Cornwall Insight suggests that energy bills are likely to remain three times higher than pre-Ukraine invasion levels until the end of 2023.
According to the FT, officials have told business groups that the full package could be announced by the chancellor as early as tomorrow (Tuesday), when Hunt is due before MPs at Treasury ministers’ question time and prime minister Rishi Sunak will be appearing in front of the House of Commons liaison committee.
The chancellor had already announced in his Autumn Statement that under the Energy Price Guarantee for domestic customers, the typical household would see energy bills rise from £2,500 to £3,100 in April.
A position paper, published last week by the Energy Intensive Users’ Group (EIUG), which represents heavy power-using sectors such as steel and cement, says much UK manufacturing may no longer be commercially viable unless the government extends its bills relief for firms when the existing support package winds up in April.
The EIUG has urged energy-intensive industries to be classified as ‘vulnerable’ and therefore eligible for continued costs support once the government’s existing scheme for firms runs out.