Scaled back energy scheme needs rethink - Chamber

The government 's scaled back energy support scheme falls short for many firms who are facing huge cost pressures, business leaders warned today.

Under the new scheme, firms will get a discount on wholesale prices rather than costs being capped as under the current one which ends in March.

Heavy energy-using sectors, like glass, ceramics and steelmakers, will get a larger discount than others.

But firms will only benefit from the scheme when energy bills are high.

From 1 April, 2023 to 31 March, 2024, all eligible non-domestic customers who have a contract with a licensed energy supplier will have a unit discount of up to £6.97/MWh automatically applied to their gas bill and £19.61/MWh applied to their electricity bill.

This will be subject to a wholesale price threshold, set with reference to the support provided for domestic consumers, of £107/MWh for gas and £302/MWh for electricity.

This means that businesses experiencing energy costs below this level will not receive support.

As with the current scheme, customers do not need to apply for their discount- suppliers will automatically apply reductions to the bills of eligible businesses.

Greater Birmingham Chambers of Commerce warned the revised scheme could place businesses under further pressure next winter.

Chief executive Henrietta Brealey (pictured) said: “Ensuring that businesses have the confidence, and backing of Government, to navigate the huge increases in energy costs that they are facing is critical for staving off a deep recession, retaining jobs and facilitating a quick return to growth.

“This scheme is welcome in providing some level of ongoing support to all businesses with additional for those classed as energy intensive and offering a 12 month timeframe. But there are still many businesses that will feel, at best, underwhelmed by this announcement.

“The Government are clearly betting on the recent fall in wholesale prices being passed on to businesses in the coming weeks. We all hope that they are right and ready to adapt their plans if they are not or if businesses face a further round of pressures next winter.

“As outlined by the British Chambers of Commerce, we need to see the Government formulate an energy support strategy to help improve long term efficiency - whether that 's increasing Ofgem 's powers to protect businesses from unscrupulous operators or pushing for greater devolution to improve energy storage at the regional level. ”

Ann Tonks, the boss of Edgbaston restaurant Chapter, said the revised scheme leaves sectors such as hospitality vulnerable.

She said: “Hospitality is a vulnerable sector on a knife edge; it is also the life blood of our communities. To be let down so badly is further demonstration that this government does not understand the existential crisis facing the hospitality sector.

“Our electricity costs are 68 per cent higher than 12 months ago, and gas prices have doubled. This is against a background of over 20 per cent food inflation.

“The government must get a grip of the real hardship facing SMEs and come up with a proper plan of support. It is simply too costly to run a business at the moment, and today 's announcement leaves us feeling even more exposed.

“Every independent business I know has been backed by considerable personal investment from management, friends, family. We are not asking for handouts, we are asking for well considered, targeted support from government. That will cost less in the long run than deserted high streets.

“I just want to make the point that SMEs are not grasping for handouts - we 're all working incredibly hard to keep going and putting our money where our mouths are! ”

Read the Chamber 's latest Quarterly Business Report.