Taxpayers to foot the bill for half of businesses’ electricity bills
Taxpayers will have to cough up half the electricity costs for British businesses this winter, with the Government set to announce a bailout to stave off bankruptcies over the coming months following surging wholesale prices.
Business Secretary Jacob Rees-Mogg is expected to announce that the Government will limit the amount companies can be charged for their energy bills in a statement this morning at 9am.
The intervention is expected to reduce companies’ electricity bills by 50 per cent and cut their gas costs by a quarter, according to The Telegraph.
This reduction is set to last for six months from October, and will be applied directly to thousands of companies’ bills across the country.
The cap is expected to limit the rate businesses can be charged by their energy provider to around 21.1p per kilowatt hour (KWh) for electricity and 7.5p per KWh for gas.
This is substantially below expected wholesale costs, and the Government will pay providers to make up the difference.
A surge in wholesale gas prices amid cuts to European gas supplies triggered by Russia’s war on Ukraine has exacerbated a crisis in the costs of living and doing business.
Analysts have warned that without Government support, contracts are up for renewal in October face four to five-fold increases in energy bills.
The expected announcement comes less than two weeks after Prime Minister Liz Truss announced plans to stepped in to cap household energy bills at an average £2,500 per year for two years from October.
Without government intervention, household energy bills would have risen to an average £3,549 from October.
The total bill for businesses and household support is expected £100bn – significantly more than the pandemic furlough scheme, which cost £70bn.