Energy bills: Government plan to cap costs for six months for businesses slammed as ‘too little, too late’ for firms struggling with gas and electricity costs

The Government has unveiled plans to pick up nearly half of the costs businesses are facing from higher utility charges.

Westminster has promised to foot part of an organisation’s bill if the wholesale price of gas and electricity stays above a set level.

But while it is hoped the move could stave off collapse for thousands of companies, fears are already growing it will be little more than a “short-term fix”.

“What has taken the Government so long?” demanded South Shields MP Emma Lewell-Buck.

"Business owners in South Shields have spent months of sleepless nights worrying, laying off staff and changing their opening hours, others have had to close their doors for good whilst the Government dithered and delayed.

"The best the PM could come up with is only six months of support – energy prices aren’t suddenly going to drop in that time and business need to plan further ahead than six months’ time.”

The new scheme – which is separate to a similar initiative launched earlier this month to cap household bills – could roughly halve the price paid for wholesale gas and electricity by non-domestic customers, which include schools and charities.

Ministers have said the support will approximately match the per-unit price households will pay to cover the wholesale price of their energy from the start of October.

But unlike the two-year household support scheme, businesses will only be helped for six months from the start of October.

Matthew Fell, chief policy director at the Confederation of British Industry (CBI), called the latest policy announcement a “substantial short-term fix to a long-term problem”.

But other business leaders have been more skeptical, such as Shevaun Haviland, director general of the British Chambers of Commerce, who said firms needed more guarantees of long-term support.

This view was backed by Jarrow MP Kate Osborne, who called the latest plans “too little, too late”.

She added: “Businesses are already going under, unable to cope with increased costs they are facing.

"Businesses have been waiting for months for assistance – instead they get a sticking plaster.

"Liz Truss and her Government are content to leave working people and small and medium sized businesses to foot the bill for this Tory cost-of-living crisis.”

The emergency cap is expected to roughly half the wholesale price on the open market.

According to the Government, this would mean a pub using 4 MWh of electricity and 16 MWh of gas on a fixed-price contract could see its bill drop from £7,000 to £3,900.

But firms on default, deemed or variable tariffs will be offered a per-unit discount instead, meaning less certainty on costs.

John McCabe, chief executive of the North East of England Chamber of Commerce, welcomed the move.

He said: “This has been Chamber members’ number one concern for the last six months and it is vital that the proposed package meets the size of the challenge.

"However business, charities and public sector energy arrangements are very different to households, so we’ll be looking closely at the small print as well as making sure the initial six months of support doesn’t create a cliff edge for our members in the Spring.”