As part of a proposal to assist companies deal with skyrocketing energy costs, Liz Truss will exclude energy-hungry sectors like steel from any green taxes.
Plans to relieve the country’s cost of living crisis must address the effect it is also having on businesses, according to allies of the Foreign Secretary, who is the front-runner to become prime minister next week.
Six of the largest pub and brewery companies in the UK’s leaders yesterday signed an open letter to the government urging it to take action to prevent “real and significant irreparable” harm to a sector facing increases in energy costs of up to 400%.
Allies of the Foreign Secretary, who is expected to be elected prime minister next week, said efforts to ameliorate the country’s cost of living crisis must take into account the effect it is having on businesses as well.
The industry trade group UKHospitality warned policymakers in a separate letter last night that without help, the sector risked “widespread economic collapse.” “Hospitality firms are facing a crisis this winter, with growing prices paired with a dramatic decline in disposable budgets for our consumers,” said chief executive Kate Nicholls. Tens of thousands of jobs will be lost as a consequence, she said.
According to the CBI and other organizations, many businesses may find it difficult to pay bill hikes this winter since the energy price restriction does not apply to businesses. As part of negotiations on a projected emergency Budget, Miss Truss and her backer, Business Secretary Kwasi Kwarteng, have been talking about potential assistance.
According to a source, the package is expected to include urgent assistance for energy-intensive industries like steel, paper, chemicals, and cement that are particularly vulnerable to price increases. It is anticipated that this would include exempting the industry from all green charges.
Energy-intensive businesses are already free from 85% of the expenses related to policies like the climate change tax. However, this is going to be extended to 100%, which will save businesses tens of millions of pounds and help them stay competitive in international markets.
The next government is also considering a number of other possibilities, such as grants and loans in the vein of Covid as well as providing businesses more time to fulfill their tax obligations. Which further steps will be used was not disclosed by sources.
The emphasis has understandably been mostly on the need to assist people, but we also need to make sure that we do not lose viable enterprises as a result of the rise in energy prices, according to a senior ally of Miss Truss.
Several components of a £37 billion assistance package, including a £400 bill reduction, were still going into effect, according to Boris Johnson yesterday.
Businesses with high energy expenditures, such as restaurants, taverns, and nursing homes, won’t be able to handle the current price increases.
On the strength of record world prices, Treasury projections from yesterday night forecast that UK energy companies may earn $170 billion in extra profits. It implies that the 25% energy gains tax may generate tens of billions of pounds to assist in funding a rescue package.
However, Miss Truss, who has opposed windfall taxes, has not yet indicated whether she would keep the new tax.
Yesterday, Boris Johnson said that various components of a £37 billion assistance package, including a £400 bill reduction, were still going into effect.
There will be a great deal arriving. There will be a lot more, the prime minister added.