Grant Shapps defends 'difficult decision' to 'scale back' energy support for businesses

10 January 2023, 08:52 | Updated: 10 January 2023, 08:53

Grant Shapps defends the Conservative's decision to 'scale back' energy support for businesses.

EJ Ward

By EJ Ward

Business Secretary Grant Shapps has defended the scaling back of support for businesses with their energy bills, saying a "responsible government has to make those difficult choices".

The comments come after the Government pleged to help businesses with their energy bills for another year, but significantly reduced the amount of support they will get.

Under the new scheme, firms will get a discount on wholesale prices rather than costs being capped as under the current one.

Heavy energy-using sectors, like glass, ceramics and steelmakers, will get a larger discount than others.

Read more: Business' support with energy bills to be slashed from April, government confirms

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But firms will only benefit from the scheme when energy bills are high. Only when prices reach £107 per MWh for gas and £302 per MWh for electricity or higher will companies receive discounts.

Nick Ferrari at Breakfast on LBC grilled Mr Shapps, putting it to him that companies having to put up prices as a result of the move would not counter inflation, the Business Secretary replied: "It's fair to acknowledge that when you do anything, make any of these policy decisions, you're always balancing an array of often quite difficult choices.

"In this case, more borrowing and more tax against supporting businesses and what the Chancellor's tried to do is balance both of those things.

"What I am saying is a responsible government has to make those difficult choices between do you put up tax, do you run the risk of higher mortgage rates and loan rates for businesses - we saw what happened with that before - or do you kind of ease back to a normal situation where governments don't normally intervene and support energy bills."

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The new scheme will run until the end of March 2024, while a limit has been set on it in a bid to reduce how much taxpayers are exposed to spiralling costs.

The energy support scheme is mainly used by businesses, but is also for charities, and public sector organisations such as schools and hospitals.

The government first launched the package last September after prices were driven up in the wake of the pandemic and the war in Ukraine.

A cap of £5.5bn has been set on the latest scheme in an effort to limit taxpayers' exposure to spiralling costs.

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