New blow for firms as Hunt slashes fuel bill help by 90%

THE budget to help firms cope with record energy bills is to be slashed by almost 90 per cent.

Chancellor Jeremy Hunt will unveil cuts to the energy support scheme brought in to shield firms from soaring gas prices this winter. It is expected to cost £18billion over the six months to April.

Government sources said the support would be continued for 12 months, but only £5billion would be spent on it – equivalent to a like-for-like drop of 86 per cent for the first six-month, £2.5billion block.

This partly reflected a recent fall in global gas prices. But ministers believe the scheme, launched by Liz Truss’s government, is unaffordable.

A Treasury source said: ‘Subsidising energy costs for businesses is money that can’t be spent on schools, police, hospitals – or lowering the tax burden.’ Help is likely to be phased out altogether from April 2024. It means that millions of businesses face huge rises to their energy costs.

And firms in sectors such as hospitality and retail will face a drop-off in demand as support for household energy bills also falls.

Kate Nicholls, chief executive of industry body UK Hospitality, warned: ‘For our members, energy bills have soared to become the determining cost for whether they are viable. A rapid reduction in support will be particularly damaging.’

Mr Hunt had planned to target cash for the final year of the scheme on the most vulnerable sectors, such as pubs, restaurants and care homes. But officials concluded that almost all firms would need help.

Those in energy-intensive sectors – such as steel, chemicals and paper – will get extra help.