A new scheme to support firms with their energy bills will be announced in the House of Commons today, amid fears support could be cut by as much as 85%
The current scheme which caps the unit cost of gas and electricity for all businesses expires at the end of March.
It will be replaced with a new scheme that offers a discount on wholesale prices rather than a fixed price.
Very heavy energy-using sectors, such as steel, glass and ceramics, are expected to get a larger discount than others, Treasury sources told the BBC.
However, The Telegraph reports that Primer Minister Rishi Sunak and Chancellor Jeremy Hunt have agreed to slash overhaul support for businesses in April after spending as much as £18bn on a six-month package of comprehensive support.
It is understood that help for the following year will drop to around £5bn. This equates to £2.5bn every six months, a fall of 85%.
At present, businesses' wholesale energy costs are capped at 21.1p per kilowatt hour (kWh) for gas and 7.5p per kWh for electricity, with the Government paying the difference between that level and high real prices. However, this level of support is to be reduced.
The Telegraph says it understands the plan will remain universal, meaning all UK businesses will continue to get some support, as they currently do.
The Treasury will argue that the reduction is in part a result of recent falls in wholesale gas and electricity prices, meaning less taxpayer money is needed to keep bills low.
Analysts have calculated that the Treasury could save the estimated £13billion it planned to borrow to pay for a household energy cap this year, giving Jeremy Hunt sizable headroom before his spring statement.
The UK’s wholesale gas prices dipped below pre-Ukraine war levels this month, to as low as £1.62 per therm last week. That compares with a peak of £6.40 at the height of the energy crisis in August and is a drop of more than 50%since the start of December.