A new energy scheme for businesses has been confirmed by the government ahead of the current scheme ending in March.
The government is currently reducing business energy bills by effectively controlling the wholesale price that is the main component of businesses’ energy bills. After extensive consultation, the government will be moving away from this model on 1 April and instead providing a subsidy to electricity bills of 1.96p per kilowatt hour for all business customers paying over a minimum rate.
A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries.
Chancellor Jeremy Hunt said: “My top priority is tackling the rising cost of living – something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.
“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.
“Even though prices are falling, I am concerned this is not being passed on to businesses, so I’ve written to Ofgem asking for an update on whether further action is action is needed to make sure the market is working for businesses.”
In response, ACS chief executive James Lowman, said: “The new package of business support is woefully inadequate. By moving to a subsidy on energy bills, and failing to target specific sectors or those worst affected, the government has spread £5.5bn support over every type of business, the result being a level of subsidy that is ultimately pointless.
“Make no mistake, local shops will go out of business if the government does not rethink its approach before April. Retailers who struck contracts at the peak of the wholesale energy price will still see their bills quadruple even with this meagre support, blowing their commercial model out of the water. Our sector is resilient, plays a vital role in communities, and in fact offers energy bill payment facilities for millions of customers including the most vulnerable. This policy will have very serious consequences for our members and the customers and communities they serve.
“It is not too late for the Chancellor to reconsider the support he is offering, to find practical ways of targeting it more effectively, and to save the businesses who he is effectively consigning to closure with his decision.”
The NFRN’s National President Jason Birks added: “This is hugely disappointing for many independent retailers who are struggling to survive. With rising energy bills, falling margins, and rising payroll costs, small businesses will continue to struggle or, indeed, cease to exist unless additional financial support is available.”
Gordon Balmer, Executive Director of the Petrol Retailers Association, said: “Our members have worked hard to keep their communities fuelled and fed during unprecedented times. The government’s failure to provide targeted help to sectors most in need will threaten fuel resilience in the UK.
“We urge the Chancellor to reconsider his decision and offer support to business who might struggle to survive after this cut.”
The Federation of Small Businesses in Scotland has also voiced concerns over the “dramatic” scaling back of energy bill support for small businesses. Andrew McRae, FSB Scotland Policy Chair, said: “This is a significant reduction in support – and it will have real-world impacts.
