Cut in energy bill support ‘will raise food prices’

A DRASTIC cut in energy bill support for businesses will leave shoppers facing higher food prices and steelmakers at a disadvantage to Germany, business groups warn.

The Treasury announced it was reducing support to a maximum of £5.5bn for an extra year from April as ministers warned current subsidies were unsustainable.

James Cartlidge, exchequer secretary to the Treasury, said bankrolling schemes including furlough during lockdowns and support for Ukraine had been “right but all have come at a cost”.

The Treasury said an estimated £18bn of support to UK businesses in the six months to March was equivalent to “an increase of 3p on people’s income tax”.

Mr Cartlidge added: “It is not for the Government to habitually pay the bills of businesses any more than it is to tell businesses how to turn a profit.”

The new Energy Bill Discount Scheme will reduce rather than cap energy costs for businesses and will last until the end of March 2024.

But businesses can only benefit when energy bills are high. Companies paying less than £107 per MWH for gas and £302 per MWH for electricity will not get support.

High-energy-using businesses will receive discounts under the scheme when gas costs £99 per MWH and electricity costs £185 per MWH.

Shane Brennan, chief executive of the Cold Chain Federation, said: “The Government is gambling on the wholesale price of gas staying low through winter and spring. As a result they are gambling with the viability of food supply chain businesses that most people would consider critical infrastructure.”