Britain Plans to Cut Energy Subsidies from April, Glass Industry Is Worse

Businesses will receive less support for their energy bills from the end of March,

the UK government has confirmed, as the Treasury attempts to cut the cost of compensating for soaring gas and electricity prices. James cartidge, the chancellor of

the exchequer, said on Monday that the government would provide £ 5.5bn of "transitional support" to businesses over 12 months from April 1, 2023.

Mr Cartledge said government funding for the rollout of the COVID-19 vaccine, furloughs and support for Ukraine "is right, but all of it comes at a price". "The government should not habitually pay for business," he added.

Under the scheme, non-domestic energy customers-including businesses, schools and charities-will automatically receive a rebate of £ 6.97 per MWh for gas and £ 19.61 per MWh for electricity. That's the equivalent of saving £ 2,300 for a pub or £ 400 for a typical small retail outlet, Calich said. Businesses that cost less than £ 107/MWh for

gas and £ 302/MWh for electricity will not be supported. Small business representatives have labelled the move a "huge disappointment" as their support will be significantly reduced.

The new plan will last until March 2024 to avoid the end of the "cliff edge" of subsidies that businesses fear this spring. The

existing plan, which began in October, caps gas and electricity unit costs for all businesses until the end of March. Under the scheme, the UK Treasury funds a discount on electricity bills for non-domestic customers, making up the difference between the wholesale price and the "government support price". The "government support price" is £ 211 per MWh for electricity and £ 75 per MWh for gas.

The Treasury has now replaced this with a scheme that offers discounts on wholesale rather than fixed prices.

The move mirrors a similar move to reduce energy price guarantees for domestic energy consumers announced by Chancellor Jeremy Hunt in November. The EPG initially capped the typical household annual bill at £ 2,500, but from April it will be adjusted to a cap of £ 3,000. Major manufacturers with high energy bills, such as

steel, glass and ceramics, will receive a deeper discount, equivalent to £ 7,000 of support over 12 months.

The government says they will get a discount between the wholesale price of energy and a specific price threshold-£ 99/MWh for gas and £ 185/MWh for electricity-because they cannot pass on the increased costs to customers due to international competition.

The businesses will receive a 70% rebate on energy capacity, up to a maximum of £ 40 per MWh for gas and £ 89.1 per MWh for electricity. The cost of corporate support to the Treasury was

estimated at about £ 18bn in the six months to the end of March. However, as the scheme becomes less generous, the burden on the public purse will ease if the recent fall in wholesale gas prices continues.

Mr Hunt had been expected to announce changes to the scheme in December, but the delay has left businesses calculating their 2023 energy budgets.

Mr Hunt said on Monday he had raised concerns with Ofgem, the UK's energy regulator, that suppliers were not passing on discounts to customers. Martin McTague, national chairman of the Federation of

Small Businesses, the Federation of Small Businesses, called the move "hugely disappointing". "For those who are struggling, the discount on the new version of the plan is not significant," he said. Many small companies will not be able to survive on the small amount of money provided by the new version of the plan. Gareth Stace, director general of

UK Steel, said the scheme "provides steel producers with some important certainty and stability in their production costs in the current extremely difficult economic climate". "However, there will be concerns that the newly announced support is not as strong as that of competitors, including Germany,"

he added. Tom Thackray, director of decarbonisation policy at the Confederation of

British Industry (Confederation of British Industry), said: "It is unrealistic to think that this scheme can be sustained at affordable levels in its current form, but there is no doubt that it will not be affordable." Some companies will still find it difficult.

In addition, the government on Monday put forward proposals to encourage investment in low-carbon technologies and avoid blackouts.

Capacity market reforms are designed to ensure reliable power regardless of the weather, which will make it easier to prevent blackouts in the absence of intermittent renewables.