Chancellor Cuts Energy Support Package in Mini Budget Reversal

THE UK Government’s two-year energy support package will only last until April – as Chancellor Jeremy Hunt announced the majority of Liz Truss’s planned tax cuts in her mini-budget are to be scrapped.

The Chancellor said the energy price guarantee had been the “biggest single expense” in the government’s growth plan, adding that from next April “any support for businesses will be targeted to those most effected and the new approach will better incentivise energy efficiency” , and issued a stark warning that “there will be more difficult decisions” on tax and spending ahead, confirming that “some areas of spending will need to be cut”.

Mr Hunt confirmed that all tax measures announced in the mini-budget, which sent the value of the pound plummeting, will be scrapped except the stamp duty changes for England and the reversal of the National Insurance contributions rise to pay for health and social care services.

A proposal to cap the unit price of gas and electricity for households has been reduced from two years to last just six months until April 2023 but plans for additional support beyond then are now in doubt. The Chancellor did not make it clear whether the government’s energy support package for businesses, also due to end next April, will be amended.

The Treasury is to launch a review into how energy bills are supported beyond April next year to design a new approach that Hunt said would cost the taxpayer “significantly less than planned” while ensuring there is enough support available.

Hunt said that it was “not responsible to continue exposing public finances to unlimited volatility in international gas prices”.

The government has also scrapped its planned cut in dividend tax rates, the VAT-free shopping scheme and the announced freeze on alcohol duty rates.

KHospitality CEO Kate Nicholls said:
“Given the economic volatility we have seen over the past few weeks, we understand the need for the Chancellor to announce these measures today, designed to deliver stability and restore confidence. I would encourage the Government to work with the UK’s hospitality sector to unlock its enormous potential to support our economy in delivering growth, creating jobs and driving the recovery.

“Prior to the energy crisis, which is proving to be so devastating, the sector was forecast to grow by 3% and there is still a real desire from our dynamic hospitality businesses to return to those levels of growth.

“However, the hospitality sector is so exposed to this crisis and has been devastated by it, which is why the energy support provided by the Government to help weather this storm, remains critically important and will help protect a vital industry. It’s essential that the government continues to work closely with the sector as part of its review into support post-April 2023.

“One area in dire need of urgent reform is the business rates system, which is currently not fit for purpose and places an unfair burden on hospitality businesses. This is particularly pressing now, given the additional costs hospitality businesses will now be facing as a result of the freeze on alcohol duty being scrapped.”

CAMRA Chief Executive Tom Stainer said:
The UK’s pubs and breweries are facing crippling energy costs which are already forcing some businesses to shut up shop for the winter months to ride out unaffordable bills – or close down altogether.
“Pubs already under serious pressure now face further uncertainty about what support will be available with gas and electric bills beyond April next year. The Prime Minister had previously said that pubs would be one of the businesses that would get extra support beyond the six month period. The Chancellor must urgently confirm whether or not this is still the case.

“Scrapping the planned freeze on alcohol duty is disappointing, although it is useful to have confirmation that plans to change the alcohol duty system next summer – including a lower rate of duty on draught beer and cider to support pubs and pubgoing – are still going ahead.

“CAMRA are calling on the Chancellor to use his next statement on 31st October to rethink the freeze on alcohol duty – as well as announcing desperately needed help in the form of cutting VAT for on-trade food and alcohol, and assistance with the burden of business rates. Otherwise we risk the nation’s locals being forced to close their doors for good.”