Jeremy Hunt has warned trade bodies that “no government can permanently shield businesses from this energy price shock”.
The chancellor of the exchequer met with business groups, including the Confederation for British Industry, Institute of Directors and UKHospitality on Wednesday (4 January) afternoon. While the meeting was held behind closed doors, the Treasury later released a statement summarising Hunt’s message.
It appeared to confirm reports that the current support for firms struggling with soaring energy bills will be cut when the government outlines its plans beyond April. Further details are expected next week.
The government has been criticised for delaying the announcement on the next steps for the Energy Bills Relief Scheme (EBRS), with Kate Nicholls, the chief executive of HospitalityUK, describing it as having a “corrosive effect on business confidence”.
A Treasury spokesperson said following the meeting: “The government has protected businesses this winter from these high energy costs through the £18 billion EBRS – one of the most generous support packages in Europe.
“However, no government can permanently shield businesses from this energy price shock.
“The chancellor was clear that this level of support is unsustainably expensive and that the current scheme was always time limited to six months.
“Extending the scheme at current levels could cost tens of billions of pounds, with costs potentially doubling or tripling if international energy prices increase further than expected.
“It is vital that taxpayers’ exposure to volatile international energy prices is reduced.
“However, the chancellor also heard the concerns of the business community who are facing high energy prices and explained that any future support, while at a lower level, would be designed to help them transition to the new higher price environment and avoid a cliff edge in support.”
The comments come as new predictions show falling wholesale power prices being translated into a dramatic drop in the price cap throughout 2023. Investec has estimated that the next cap level will be set around £3,458 – down from £4,279 at present – and will fall further to £2,640 in July.