Truss told to speed up energy help for business

Industry figures say details of support package must be hammered out in days to take effect this winter

THE energy industry needs details of Liz Truss’s promised support for businesses on power bills within days for it to take effect this winter, sources have warned.

The new Prime Minister last week set out plans to freeze energy bills at £2,500 for the average home, and promised “equivalent support” for businesses. Unlike the household scheme, few details were given on the business support with the Government pledging to unveil a more complete plan as soon as possible.

The death of Queen Elizabeth II and the accession of King Charles III has necessarily taken priority when it comes to government business in recent days. However, this has raised concerns that the headline policy to tackle the energy crisis may receive less attention during national mourning.

Energy industry figures said details needed to be shared with the sector urgently to give suppliers time to process them and make sure companies can benefit this winter.

“We are talking in days – we have to come up with a solution,” said one source at a major power provider.

Government insiders indicate they hope to make rapid progress on designing the scheme this week, with the expectation that businesses can get help roughly as quickly as households.

Jacob Rees-mogg, the new Business Secretary, is understood to have held joint meetings with Kwasi Kwarteng, his predecessor and the new Chancellor, and energy bosses in order to ensure continuity and speedy decision making.

Providing help to businesses is “hugely complex” because of the way in which companies pay for energy, the industry source said.

Households generally pay in line with the price cap and are largely covered by a small number of major suppliers, following the collapse of dozens of utilities firms last year. However, businesses tend to pay different rates based on their industry and usage. Companies are not covered by the price cap, so are served by a wide range of different negotiated contracts. New support needs to cut through the morass of individual deals.

The promise of support for businesses is part of a series of reforms aimed at buttressing and bolstering Britain’s energy supply.

Separately, energy producers are in talks with the Business Department to agree to cheaper longer-term contracts to sell electricity, via contracts for difference (CFD) in an effort to guarantee lower costs to consumers for the years ahead.

Chris O’shea, chief executive of British Gas’s parent company Centrica, said that “extraordinary circumstances call for us all to think differently”.

“The Government support package is bold but we need to address the root cause of high prices as well as the symptoms,” he said.

“Using CFD contracts for existing gas and electricity producers is the solution as it means in times of heightened global prices, the excess profit above a certain price automatically flows back to reduce consumer bills.

“We are prepared to offer our electricity production and our North Sea and Irish Sea gas production into this mechanism to help reduce energy bills for consumers and we hope others will follow.”

Other major producers are also involved in the negotiations, including French power giant EDF.

Ms Truss did not put a price tag on the support package when it was announced last week. The exact cost is difficult to estimate as it involves capping bills in the face of volatile energy markets, potentially leaving the Government with no upper limit on the amount it may have to pay in subsidies.

Economists at the Institute for Fiscal Studies said the combination of a sixmonth package for businesses, plus the longer freeze on household bills, is likely to cost “more than £100bn over the next year alone”.

George Buckley, an economist at the investment bank Nomura, said “energy price caps could cost the taxpayer £150bn over the course of the coming two years, twice the amount spent on the furlough scheme”, citing reports that support for companies could cost in the region of £60bn.