UK Government reveals energy price guarantee plan

The UK government will offer businesses a six-month support package as part of its newly announced energy price guarantee scheme.

The plan is to give non-domestic energy users equivalent support to what is being offered to consumers at least over the winter period. Households will get help for a longer period with most paying no more than £2,500 a year on their energy bill for the next two years from 1st October.

Some businesses may get help for a longer period. In its press release announcing the scheme the government said it would provide ongoing support for vulnerable industries. There will be a review in 3 months’ time to consider where this should be targeted to make sure those most in need get support.

The government plans to fund the scheme through increased borrowing. It is expected to cost in the region of £150 billion.

The UK hospitality industry had been calling out for support over the summer with media briefings mostly concentrating on a consumer cap.

New UK prime minister Liz Truss said: “Decades of short-term thinking on energy has failed to focus enough on securing supply – with Russia’s war in Ukraine exposing the flaws in our energy security and driving bills higher. I’m ending this once and for all.

“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.”

At this stage it is unclear whether hospitality will be classed as a vulnerable industry after the initial six-month scheme ends.

“We very much welcome the prime minister’s recognition of the specific struggles the hospitality industry faces and the promise of further support, alongside her positive plan to help consumers and businesses tackle rising energy bills,” Kate Nicholls, CEO of UKHospitality said.

“We look forward to working with the new government on developing plans that will support long-term recovery for our sector but in order to give businesses big and small a chance to make it to the spring we will need support this autumn and winter. Measures need to provide a swift cash injection, such as cutting VAT for the sector to 10% and providing business rate relief.

“While the welcome energy price freeze will ease the pressure on our customers and colleagues, high bills will still constrain spending in the sector and operators themselves will still have to fund energy bills and other rising costs. For many hospitality businesses this will prove too much to bear and hundreds of community assets will be shut and jobs lost unless additional support is brisk and bold.”