MANY firms will not survive after the government slashed the support available to help businesses with their energy bills, it has been claimed.

The current support scheme will be replaced in April by a 12-month package which offers a much smaller reduction in costs.

According to an example on the government’s website, a pub currently getting £3,100 in support every month will in future receive £190.

Nicky Kildunne, development manager for the Federation of Small Businesses (FSB) in Hampshire, Dorset and Isle of Wight said the decision was a “huge disappointment” for small businesses.

“For those struggling, the discount through the new version of the scheme is not material. Many small firms will not be able to survive on the pennies provided through the new version of the scheme,” she said.

“This is so out of touch. Two pence off a kWh of electricity and half a pence off gas is totally insignificant for small businesses, despite costing billions to the taxpayer.”

Ian Girling, chief executive of Dorset Chamber, said: “The new deal on energy support offers cold comfort for businesses in Dorset.

“Although continued assistance and the 12-month duration of the scheme is welcome, the 85 per cent drop in the financial envelope of support will fall short for those who are seriously struggling – and these costs are significant enough to cause the closure of businesses.

“Clearly, the government must consider the public finances but the correct level of support must viewed as an investment in business to help turn the economy around and get the UK back to growth and prosperity in in a critical year ahead.”

The government package will automatically apply a discount of £6.97 per MWh to the gas bills of eligible businesses and £19.61/MWh for electricity.

There is more generous support for a list of energy intensive industries.

Simon Boyd, managing director of Chirstchurch-based structural steel manufacturer REIDsteel, said: “The structure of the reformed support scheme as a discount rather than a fixed price per unit is a reckless gamble and clear misreading of the situation which leaves business crossing their fingers for stability in the energy market whilst placing them at the mercy of continued volatility and rising prices.

“It provides a discount for energy intensive firms for electricity prices above £185/MWh which, as the trade body UK Steel has pointed out, places the UK steel industry at a serious competitive disadvantage compared to some other nations such as Germany where the government has guaranteed an electricity price of 130 euro/MWh for the whole of 2023.”

He added: “Our company faces a 400 per cent increase in our energy costs which is completely unsustainable in an industry where profits margins can be as small as one to two per cent.”

Chancellor Jeremy Hunt has said: “Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine. But to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead.”