After a warning that the current level of support was too expensive, the government will reduce its assistance to businesses with their energy bills. Instead of cost caps like they are under the current plan, businesses will receive a discount on wholesale prices under the new plan. Industries that use a lot of energy, like steelmakers, glass, and ceramics, will get a bigger discount than others.
However, businesses will only benefit from the plan when their energy costs are high. The announcement was accepted by some industry groups, but others warned that it was inadequate for businesses struggling with rising costs.
In an effort to lessen taxpayers’ exposure to rising costs, a limit has been placed on the new program, which will run until the end of March 2024. Businesses use the energy support program the most, but charities and public sector organizations like schools and hospitals also use it.
After prices rose as a result of the pandemic and the war in Ukraine, the government first introduced the package in September of that year. Although they are now lower than they were prior to Russia’s invasion, wholesale gas prices are still three to four times higher than their long-term average.
The government of United Kingdom said that it would reduce the amount of energy subsidies for the upcoming fiscal year to £5.5 billion. Official forecasters predicted that the current plan would cost approximately £18.4 billion in just six months and had been described by the chancellor as un-sustainably expensive.
Chancellor Jeremy Hunt stated that reducing the rising cost of living, which affects both individuals and businesses, is his top priority. In order to reduce inflation and simultaneously supporting families and businesses to the greatest extent possible, they must make difficult decisions.
According to a report, gas bills will receive discounts of up to 6.97 pounds per megawatt hour (MWh) and electricity bills will receive discounts of up to 19.61 pounds per MWh.
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