The government on Wednesday announced a support package including a cap that will halve the unit price paid for energy from October 1 to help companies, charities and public sector organisations, including schools, get through the winter . One estimate puts the cost of the program at £25 billion. But fears are growing in Westminster that the blanket nature of the bailout will lead to huge businesses that could avoid rising energy costs this winter making cuts they don’t need. Labor MP Charlotte Nicholls said: “The government shouldn’t be wasting taxpayers’ money and, frankly, a price cap set at the same rate for all businesses is just a huge corporate handout to businesses that won’t need it , rather than targeting support to those who will.” Carla Denyer, co-leader of the Green party, said the plan needed to prioritize energy efficiency and be “more targeted than a simple cap on wholesale energy costs”. Denyer said: “Many small businesses will need help to reduce their energy costs. We will provide companies with grants for new energy efficient equipment. “For the biggest businesses that can afford it, I would like to see the Government’s energy bill support made dependent on detailed and credible plans to improve their energy efficiency and reduce their carbon emissions over the coming years. “That way, rather than a short-term sticking plaster, it’s an incentive for businesses to make lasting improvements that will benefit the climate and their own productivity.” The government said it would place conditions on companies receiving other forms of support. Earlier this month, the Treasury and the Bank of England announced a £40 billion fund to help energy traders with liquidity if they agree to a set of yet-to-be-defined terms. These could include a cap on dividends and executive bonuses. During the pandemic, major retailers including Tesco and Sainsbury’s returned business rate relief to the Treasury after a public backlash. On Wednesday, the business department announced a “supported wholesale price” – expected to be £211 per megawatt hour for electricity and £75 per MWh for gas – which it said would be less than half the wholesale prices expected this year winter. The cap means electricity prices for business customers will still be around double what they were in October 2021, when the price per MWh was £117, but more than half the forecast winter prices of around £540. Businesses will not need to take any action as discounts will be automatically applied to their accounts. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. The changes will apply to new contracts from 1 October and to fixed contracts concluded from 1 April. The government said those on default, metered or variable tariffs will receive a per-unit discount on their energy costs, up to the maximum difference between the supported price and the average expected wholesale price over the scheme period. The amount of this rebate is likely to be around £405 per MWh for electricity and £115 per MWh for gas. For businesses with flexible purchase contracts, typically some of the largest energy consuming businesses, the level of reduction offered will be calculated by suppliers according to the specifics of that company’s contract. The government has pledged to publish an overview of the scheme’s operation in three months as it considers whether to extend support beyond next March. The cost to the government is unknown as it will depend on wholesale energy purchases. However, consultancy Cornwall Insight estimated it would cost £25bn while Investec predicted £22bn to £48bn. The government is expected to outline the cost in Friday’s budget statement. The government is also planning to introduce legislation to ensure landlords pass on a £400 energy discount to customers with all-inclusive bills.
