New support for businesses and non-domestic customers facing rising energy bills in Great Britain and Northern Ireland has been unveiled by Business Secretary Jacob Rees-Mogg. It has been introduced with the aim of supporting growth, preventing unnecessary insolvencies and protecting jobs.
Through the Energy Bill Relief Scheme, the government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices.
The overarching sentiment of many trades and business organisations is that while this initial relief is welcomed as it provides a ‘lifeline’ to many companies, it is only a temporary fix that covers up a much larger issue, and that over the next months the government must use this time wisely to decide on the next steps.
Despite the cautious optimism, there has been a general call for longer term solutions to help combat the tough year that lies ahead, helping to create confidence amongst businesses and opportunities for growth.
- Drive for energy efficiency and lowering demand
- Expanding access to renewables (such as wind and solar)
- Introduction of further energy market reform
There have also been concerns about what wasn’t included in the government’s announcement.
- No mention of a cap on Standing Charges
- Clarity on the government’s exit strategy, and what will happen next.
- The complexity of delivering the scheme and making sure businesses don’t fall through the cracks, whilst also ensuring vulnerable sectors get the support they need.
Drive for energy efficiency
Possibly one of the more interesting points raised in the Government’s guidance notes for the Energy Bill Relief Scheme was that when the initial six-month period of support came to an end, any further support would be slimmed down to target only the businesses and non-domestic energy users who remained vulnerable to soaring energy costs. For example, energy intensive organisations who find it harder to easily reduce their energy demand.
The message is clear; if you are a large, non-energy intensive business you should be using the six months breathing space to identify measures to protect yourself against energy prices – through energy efficiency and demand reduction.
Here’s what business bodies and trade organisations had to say…..
Energy UK Director of Advocacy Dhara Vyas
“Energy UK has been calling for intervention to match the scale of this crisis so we very much welcome the Prime Minister’s announcement and immediate focus on energy. Wholesale gas prices are likely to remain high for some time so we need to be prepared for this support to be in place over the next year, and there needs to be a clear exit strategy from Government. This means focusing on what we can do to bring the cost of energy down for customers over the longer term, and the best way to do this is by expanding our sources of clean, domestic power like wind and solar – as the quickest and proven route to energy security and lower bills – and by making our homes and buildings energy efficient. This must be accompanied with reform to create a market that allow consumers to benefit fully from the low cost of clean generation.”
Make UK Chief Executive Stephen Phipson
“Manufacturers will welcome today’s announcement as the start of an immediate, bold and concerted effort by Government to get spiralling energy costs for business down. It is essential that the reduction of wholesale prices are fully passed to manufacturers’ bottom line energy bills. But this must be the starting pistol on what will be a long-term race to transform our energy usage, cost and security of supply.This has to include substantial measures to drive energy efficiency, reduce reliance on the grid through incentives to on-site generation and a largescale and long-term reform of the wholesale electricity market.”
Matthew Fell, Chief Policy Director – Confederation of British Industry
“We welcome government’s quick and decisive action to provide hard-pressed businesses with a substantial short-term fix to a long-term problem. The package will ease worries about otherwise viable businesses shutting-up shop and smaller companies especially will benefit from the discounted rate. Businesses will also want to know more about the exit strategy and what happens when the six-month cap runs out. Working closely with business will be key to successful implementation. The long-run solution is to double-down on energy security and to incentivise firms to push ahead with ambitious energy efficiency programmes to lower demand.”
Shevaun Haviland, Director General – British Chambers of Commerce
“This support package is significant and will ease the cost pressures that have been piling up on businesses. It will allow many firms that were facing closure, or having to lay off staff or reduce output, to keep going through the winter. But the exact level of support will vary greatly from business to business depending on the detail of its contract, so some will inevitably do better than others. We now need action to get this saving passed onto business as soon as possible. There must also be effective legal oversight to ensure no firms that are due this money miss out. For those that will benefit, six months support is not enough for most firms to make plans for the future. We understand there are a range of unknowns for the Government in looking ahead, but without that reassurance very few firms will make plans to invest or grow. To truly revitalise our economy for the difficult months ahead then there must be a clear long-term plan that gives business the confidence to grow.”
Tina McKenzie, Policy and Advocacy Chair – Federation of Small Businesses (FSB)
“This is a substantial move and will likely be of considerable help to small firms which have been crying out for months for measures to limit the pain caused by spiralling energy prices. Today’s announcement will give certainty for the next six months, but a tough year remains ahead of many small firms.”
British Property Federation’s Chief Executive Melanie Leech
“The Government has delivered on its promise to act quickly to provide support to businesses across the UK facing crippling energy price rises. However, vulnerable sectors will need further targeted support and the Business Secretary must continue look at all options, including measures to reduce the unsustainable burden of business rates.
UKGBC’s Head of Policy & Public Affairs, Louse Hutchins
“Businesses need longer term security against high gas and electricity bills. It’s now urgent that the government comes forward with a strategy to cut the vast costly energy waste from the sector’s poorly insulated buildings and drive a shift from gas and oil heating to more efficient, low carbon options. Measures such as VAT and business rates cuts for businesses investing in decarbonising their buildings and requiring companies to measure and publish their energy performance will all be needed if we are to get off the hook of high and volatile gas bills year on year.”