London Daily

Focus on the big picture.
Saturday, May 31, 2025

UK slashes energy subsidies for businesses in 2023/24

UK slashes energy subsidies for businesses in 2023/24

Britain announced plans on Monday to scale back energy subsidies for businesses for the next financial year by about 85% to 5.5 billion pounds ($6.7 billion), after the government described the current level of support as "unsustainably expensive".

The current six-month programme of energy support that will expire at the end of March was predicted to cost 18.4 billion pounds when the government's budget watchdog published forecasts in November.

"My top priority is tackling the rising cost of living -something that both families and businesses are struggling with," finance minister Jeremy Hunt said in a statement. "That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able."

The finance ministry has been looking at ways to pare back the energy support packages as it tries to stabilise the nation's public finances after the political and economic turmoil under former Prime Minister Liz Truss's short-lived government.

The government said most businesses would receive a discount on their energy bills of up to 6.97 pounds per megawatt hour (MWh) for gas and 19.61 pounds per MWh for electricity between April 2023 and March 2024.

This is a different and less generous structure than the current programme, where the government set a maximum business tariff of 75 pounds per MWh for gas and 211 pounds per MWh for electricity, and compensates energy suppliers in case of higher wholesale rates.

Under the new programme, businesses rather than government will have to pay the extra costs if energy prices surge.

The new programme will include extra support for some energy-intensive businesses, mostly in manufacturing.


PRICE VOLATILITY


British natural gas prices began to pick up sharply in the second half of 2021, and soared after Russia invaded Ukraine in February 2022.

Prices have been extremely volatile since. Although they are now back around the same level as a year ago - and lower than when the current support package was announced - they are still several times higher than in early 2021.

Hunt said he was concerned that the benefit of falling prices was not being passed on to businesses, so he has written to the energy regulator Ofgem asking for an update on whether action is needed.

The government had originally been due to publish its proposals for business energy support before the end of 2022, but the decision was delayed, angering some businesses facing uncertainty over their energy bills.

Britain's Federation of Small Businesses said the reduced support was "a huge disappointment".

"Many small firms will not be able to survive on the pennies provided through the new version of the scheme," FSB National Chair Martin McTague said.

UK Steel - most of whose members will benefit from the extra support for high energy users - gave the programme a cautious welcome, but said it was still less generous than the aid Germany had offered to its steel producers.

"The government is betting on a calm and stable 2023 energy market, in a climate of unstable global markets, with the scheme no longer protecting against extremely volatile prices," UK Steel Director General Gareth Stace said.

($1 = 0.8199 pounds)

Newsletter

Related Articles

0:00
0:00
Close
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
Labour MPs Urge Chancellor to Tax Wealthy Over Cutting Welfare
Publication of UK Child Poverty Strategy Delayed Until Autumn
France Detains UK Fishing Vessel Amid Post-Brexit Tensions
Calls Grow to Resume Syrian Asylum Claims in UK
Nigel Farage Pledges to Reinstate Winter Fuel Payments
Boris and Carrie Johnson Welcome Daughter Poppy
×