Chancellor Kwasi Kwarteng said the government had “stepped in to stop business collapsing, protect jobs and curb inflation”, in a move expected to cost tens of billions of pounds. But business leaders warned that some firms were still exposed to sharp rises in their bills and pointed out how the support program was only to be implemented for six months from October. Stephen Phipson, chief executive of Make UK, the manufacturers’ trade body, said prices were likely to “remain high for many months”, meaning “the industry will need support for longer to protect jobs and to remain competitive”. The UK is grappling with its worst cost of living crisis in a generation and the government is trying to curb inflation fueled by Russia cutting gas supplies to Europe after its invasion of Ukraine. Liz Truss, the prime minister, this month announced a massive energy support package estimated to cost £150 billion, under which the government pledged to help UK households and businesses with rising gas and electricity bills. He said domestic energy bills would be capped at around £2,500 a year for the typical household over the next two years, but details of the business arrangements were delayed due to challenges in devising them. The government said on Wednesday that the emergency energy support scheme for businesses would mean some companies would see their gas and electricity bills cut by up to 50 per cent compared to if ministers had not intervened. Under the scheme, the government said wholesale energy prices for businesses “are now expected to be £211 per megawatt hour [21.1p/kWh] for electricity and £75 per MWh [7.5p/kWh] for natural gas, less than half the wholesale prices expected this winter — which is a reduced price per unit of gas and electricity.” UK electricity and gas contracts for this winter are currently trading at around £490 per MWh and £170 per MWh respectively, on average for delivery between October and March. Jacob Rees-Mogg, the business secretary, said the cost of the government’s support program for companies would be “undoubtedly tens of billions of pounds”. There has been some criticism of the blanket nature of UK support, which will help any business, from sole traders such as hairdressers to multinational companies. Darren Jones, Labour’s chairman of the House of Commons Business Select Committee, said helping all businesses was “a waste of taxpayers’ money”. Under the scheme, the level of “price reduction for each business will vary depending on the type of contract and the circumstances”, the government said. Most companies have fixed price energy agreements and will benefit from a wholesale price cap that covers both gas and electricity.

However, those businesses on variable tariffs – around 25 per cent of the market – will receive a per unit discount on energy costs of up to “around £405 per MWh for electricity and £115 per MWh for gas, subject to developments of the wholesale market”. By imposing a maximum discount for those on variable accounts, the government has limited the risk of taking on a completely unlimited liability. The regime will apply to all energy contracts signed with suppliers from 1 April and will last for six months from 1 October. Although the scheme is time-limited, Truss has pledged that subsidies will be extended beyond March for the most vulnerable businesses, including pubs and shops. He ordered a three-month review by officials to determine which industries should be granted extended support. The total cost of the government’s energy support programs for households and businesses is believed to be around £150 billion, but the government will not provide its own estimate until Friday, when Kwarteng presents his mini-budget. Bruegel, a think tank, said on Wednesday that the UK had announced more government support than any other country in Europe to cushion the impact of soaring energy prices, with spending expected to reach around 6.5 percent percent of gross domestic product compared to 2 to 3 percent for Germany, France and Italy.