UK Government Unveils Energy Support Plan for Hard-Hit Businesses

Western sanctions on Russia over its military intervention in the eight-year Ukraine conflict, including the UK's embargo on energy imports, have sent market prices sky-high. The government has responded with a taxpayer-funded cap on household bills and by relaxing the ban on 'fracking' for gas.

The British government has unveiled its promised aid package for businesses facing crippling gas and electricity bills this winter.

Firms on a fixed-price contract with their energy billing company since at least April 1 this year will have their electricity tariffs capped at £211 per megawatt hour (MWh), with gas also capped at £75 per MWh.

Those on other contracts will pay no more than £405 per MWh for electricity and £115 per MWh for gas. The measures will be imposed for six months.

Energy consultancy firm Cornwall Insight said that would represent a 45 percent cut in bills.

Business, Energy and Industrial Strategy Secretary Jacob Rees-Mogg said the scheme would give businesses, charities and public sector organisations an "equivalent level of support" to the £2,500-per-year cap on household energy bills for two years the government announced earlier this month.

"This, alongside the measures we are taking to boost the amount of domestic energy we produce to improve both energy security and supply, will increase growth, protect jobs and support families with their cost of living this winter," Rees-Mogg added.

The scheme is predicted to cost the taxpayer around £25 billion — on top of the £100 billion or more for the cap on household bills.

The Conservative government of new Prime Minister Liz Truss is set to lift a ban on 'fracking' for underground gas reserves. On September 1, her predecessor Boris Johnson announced £700 million in funding to start work on a new nuclear power plant at the Sizewell site in Suffolk — one of eight planned new reactors scheduled to be built by 2030.

Western sanctions on Russia over its military intervention in the eight-year Ukraine conflict, including the UK's embargo on energy imports from the Eurasian giant, have sent market prices soaring just as European countries are closing coal-fired and even nuclear power stations as part of their green agenda.

Speaking in New York on her visit to speak at the UN General Assembly, the PM said she understood businesses' concerns over the energy crisis.

"That's why we are putting in place a scheme for business that will be equivalent to the scheme for households, to make sure that businesses are able to get through the winter," Truss stressed.

Truss said the package would be "reviewed" after six months, but pledged that "the most vulnerable businesses" including pubs and shops, would "continue to be supported after that."

Around three-quarters of pubs surveyed in August said they expected to have to close down this winter due to prohibitive bills.

Kate Nicholls, CEO of trade body UK Hospitality, welcomed the the price cap as "unprecedented and extremely appreciated as we head into an uncertain winter."

"Today's announcement will give businesses some confidence to plan for immediate survival," Nicholls said, "but we will not relent in our pursuit of a more comprehensive package to safeguard businesses and jobs."

She said the government could go further by cutting Value-Added Tax (VAT) and business rates, and should plan to avoid a "cliff edge" end to the measures.