TREASURY support for businesses with rising energy bills is to be slashed from April.
The £5.5 billion scheme will see businesses, charities and schools, among others, get up to £6.97 taken off their energy bills for every megawatt hour (MWh) of gas they use.
Electricity bills will also be discounted by up to £19.61 per MWh.
Under the existing scheme - which is predicted to cost about £18.4bn - costs are capped.
The new plan was welcomed by the CBI, who said it would “provide respite for many firms”.
“It’s unrealistic to think the scheme could stay affordable in its current form, but some firms will undoubtedly still find the going hard,” said CBI director for decarbonisation policy Tom Thackray.
“The Government has done much to protect businesses through the energy crisis. It must remain open, flexible and pragmatic in its approach to volatile wholesale energy markets as the year unfolds.”
However, it was panned by the Federation of Small Businesses. Martin McTague, the group's national chair said it would be a "huge disappointment" for firms.
"For those struggling, the discount through the new version of the scheme is not material. Many small firms will not be able to survive on the pennies provided through the new version of the scheme.
“This is so out of touch. Two pence off a kwh of electricity and half a pence of gas is totally insignificant for small businesses, despite costing billions to the taxpayer. The Government will inevitably have to come back."
“Since the onset of Covid, we’ve lost half a million small firms. Allowing more well-run businesses to go under would be a false economy. But with this absurd degraded Energy Bills Discount Scheme, it looks like we’re getting there," he added.
The Government also announced that energy-intensive users, such as some factories that burn a lot of gas, will get extra support.
Those businesses that are eligible will get a maximum discount of £40 per MWh of gas and £89.10 per MWh of electricity. It will apply to 70% of their energy use by volume.
Gareth Stace, director general of UK Steel, welcomed the announcement, but said the extra support for his industry might still not be enough.
“There will be concerns that the newly announced support falls short of that of competitor countries, including Germany,” Mr Stace said.
Announcing the package, Chancellor of the Exchequer Jeremy Hunt said: “Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine.
“But to provide reassurance against the risk of prices rising again we are launching the new energy bills discount scheme, giving businesses the certainty they need to plan ahead.
“Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is needed to make sure the market is working for businesses.”
The SNP's Stewart Hosie MP said the UK Government had "once again failed to deliver."
He added: “Politics is about priorities, and the Chancellor has his all wrong.
"Instead of outlining a robust and long-term plan which would support businesses through the crisis his party created, he has offered a mere sticking plaster.
“Coupled with the ongoing disaster that is Brexit, which ended the freedom of movement and closed borders to our European allies, businesses have every right to be concerned for their future - and nothing the UK government has said today will change that.
"Instead of offering short-term solutions, the Chancellor himself must come before Parliament and outline a bolder, stronger, and long-term vision for businesses so they can prepare for the months ahead - or face devastating consequences."
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