The chancellor, Jeremy Hunt, is poised to announce a cut to the financial support offered to businesses to help with their energy bills.
A new scheme to provide support for businesses, charities and public sector organisations at a less generous level than the current scheme is expected to be presented in the House of Commons on Monday.
The existing scheme, which began in October, caps the unit cost of gas and electricity for all businesses until the end of March.
UK manufacturers fear blackouts and job losses after energy subsidy cutRead more
The Treasury is expected to replace that scheme with an initiative that offers a discount on wholesale prices rather than a fixed price.
Energy-intensive industries such as steel, glass and ceramic producers are expected to get a larger discount than those in other sectors.
Hunt met industry groups last week to discuss the scheme, which he described as “unsustainably expensive”.
The government said last week the energy scheme was “one of the most generous in Europe”, but added “no government can permanently shield businesses from this energy price shock”. The cost has been estimated at about £18bn for the six months until the end of March.
The new scheme is expected to run until March 2024, helping to avoid a “cliff-edge” end to support, which businesses had raised concerns about.
Hunt has been handed a fillip from falling gas prices in recent weeks which, if sustained through the rest of the year, could significantly reduce the cost of policies to cut energy bills for consumers and businesses.
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The Federation for Small Businesses has warned that smaller firms have lower margins and are less able to deal with cost pressures, such as rising energy bills.
The British Chambers of Commerce said more than a third of firms admitted they were having difficulty paying their energy bills even with the existing government support.
Make UK, an industry group that represents 20,000 UK manufacturers, has said cutting financial support would exacerbate job losses and reduce factory output.
