Prime minister Liz Truss has announced plans today to offer businesses “equivalent support” to households to protect against soaring energy prices – but only for six months.
A new “energy price cap guarantee,” unveiled this morning, will limit the unit price of gas and electric – keeping typical household bills at £2,500 for the next two years. Prices were due to rise to more than £3,500 in October with some forecasts topping £6,000 next year.
Full details of the scheme for businesses are so far unclear. However, after the initial six-month, the government says it will provide ongoing support for “vulnerable industries,” with a review due to take place in three months’ time.
Businesses have not previously benefited from an energy price cap and instead rely on saving costs with fixed deals. In recent months many fashion indies have reported soaring prices once their deals have ended, with some business energy costs rising by more than 500 per cent.
The government will pay energy companies the shortfall on household and business bills at an estimated cost of £150 billion. Details of the costings will be set out by chancellor Kwasi Kwarteng during a mini-budget later this month.
The government says the action will deliver substantial benefits to the economy – boosting growth and curbing inflation by four to five points.
Liz Truss said: “I’m acting immediately so people and businesses are supported over the next two years, with a new Energy Price Guarantee, and tackling the root cause of the issues by boosting domestic energy supply. Extraordinary challenges call for extraordinary measures, ensuring that the United Kingdom is never in this situation again.”
Business and energy secretary Jacob Rees-Mogg added: “The global headwinds caused by Russia’s war in Ukraine, Putin’s weaponisation of energy and the aftermath of covid, have exposed the need to strengthen Britain’s energy security for the good of the nation and the millions of households and businesses who will struggle to meet the cost of bills this winter.
“The action we are taking today will reduce that worrying burden in the short term and will invigorate the long term reforms we need to complete, to resolve the underlying problems in the energy market and ensure the British people enjoy affordable and plentiful energy in future.”