Energy bills: Government plan to cap costs for six months for businesses slammed as industry chiefs fear ‘short-term fix’ for firms struggling with gas and electricity costs

The Government has unveiled plans to pick up nearly half of the costs businesses are facing from higher utility charges.

Westminster has promised to foot part of an organisation’s bill if the wholesale price of gas and electricity stays above a set level.

But while it is hoped the move could stave off collapse for thousands of companies, fears are already growing it will be little more than a “short-term fix”.

Easington MP Grahame Morris said: “The Government energy bailout plan is a £175 billion national debt that businesses and households will have to repay over the next two decades.

"This is the Liz Truss energy tax, a use now, pay later scheme, locking every person and business in the UK into a 20-year debt plan.

"We are paying to prop up retail energy profits, to allow energy generators to make excessive profits.

"The market has failed to deliver affordable consumer energy, failed to deliver renewables on the scale required, and the taxpayer is picking up the bill.

“There should be public outrage at these actions.”

The new scheme – which is separate to a similar initiative launched earlier this month to cap household bills – could roughly halve the price paid for wholesale gas and electricity by non-domestic customers, which include schools and charities.

Ministers have said the support will approximately match the per-unit price households will pay to cover the wholesale price of their energy from the start of October.

But unlike the two-year household support scheme, businesses will only be helped for six months from the start of October.

Matthew Fell, chief policy director at the Confederation of British Industry (CBI), called the latest policy announcement a “substantial short-term fix to a long-term problem”.

But other business leaders have been more skeptical, such as Shevaun Haviland, director general of the British Chambers of Commerce, who said firms needed more guarantees of long-term support.

The emergency cap is expected to roughly half the wholesale price on the open market.

According to the Government, this would mean a pub using 4 MWh of electricity and 16 MWh of gas on a fixed-price contract could see its bill drop from £7,000 to £3,900.

But firms on default, deemed or variable tariffs will be offered a per-unit discount instead, meaning less certainty on costs.

John McCabe, chief executive of the North East of England Chamber of Commerce, welcomed the move.

He said: “This has been Chamber members’ number one concern for the last six months and it is vital that the proposed package meets the size of the challenge.

"However business, charities and public sector energy arrangements are very different to households, so we’ll be looking closely at the small print as well as making sure the initial six months of support doesn’t create a cliff edge for our members in the Spring.”

Sunderland MPs Bridget Phillipson, Julie Elliott and Sharon Hodgson have all been contacted for comment.