ENERGY bill support for businesses is set to be dramatically cut back by the Treasury later this year, it has emerged.
The UK Government set aside £18 billion to protect businesses from energy price rises from last October to the end of March.
But according to the Telegraph, the budget for the next 12 months after that is set to drop to about £5 billion - a fall of around 85%.
The plan is set to be revealed early next week but the cut in support is said to have largely been agreed upon, according to government sources.
The UK Government has decided to abandon the cap on the cost of gas and electricity for companies from spring, replacing it instead with a discount.
Prime Minister Rishi Sunak and Chancellor Jeremy Hunt will need to give it the green light, with the exact figure for the discount not yet fully rubber-stamped.
The Treasury will argue the reduction in support is in part a result of recent falls in wholesale gas and electricity prices.
Government sources have also defended the move by arguing it is unrealistic to keep capping business energy costs.
A senior government source familiar with the plans told the newspaper: "The Government is subsiding every household and business with their energy costs.
"It is not sustainable in the long-run. It means the Government has less space to focus on other priorities like lowering the tax burden. That is the raw reality."
An energy price guarantee for households is continuing until April 2024. A typical annual household bill will be £3000, up from £2500 this winter.
Kate Nicholls, the chief executive at UK Hospitality, an industry body that represents 100,000 pubs, bars and restaurants, expressed concern over the change for businesses.
"Hospitality has been recognised by the Government as a particularly vulnerable sector because of the impacts of Covid lockdowns and rail disruptions from strikes. That means we are much more fragile than other sectors," she said.
"Half of our businesses are operating at or below breaking even. For our members, energy bills have soared to become the determining cost for whether they are viable or not.
"Therefore any very rapid reduction in energy bill support will be particularly damaging. We have been making that point to the Treasury for weeks now."
