One of the UK’s leading energy suppliers has criticised the Government’s decision to delay outlining future support for businesses beyond next spring.
Anthony Ainsworth, chief operating officer at npower Business Solutions, told City A.M. businesses need reassurance, so that they can make plans for the new year and navigate challenging economic conditions.
He said: “It is disappointing that the promised pre-Christmas announcement on the future of the Energy Bill Relief Scheme (EBRS) has been delayed until early 2023. To plan ahead, businesses need certainty, so any delay will only add pressure to an already pressurised situation. Hopefully this clarification will come as soon as possible in the New Year.”
This follows business leaders accusing the Government of leaving firms in the dark, after ministers pushed back the announcement of what aid will be on offer until next January.
The EBRS was unveiled in September, sheltering businesses from soaring wholesale costs – which have climbed to record highs amid skyrocketing oil and gas prices following Russia’s invasion of Ukraine.
There has also been a severe economic downturn in recent months, with growing expectations of an extensive recession.
It runs until April and caps electricity and gas at £211 and £75 per MWh respectively.
Unlike households, energy bills for businesses are not restrained with a price cap.
Instead, firms typically secure one-to-two-year agreements for medium-term gas deals.
Despite recent media reports the package would be extended by a year, the Government has delayed making any fresh announcements until January.
Ainsworth pledged to work closely with business customers until then to help reduce their costs with energy efficiency measures and consumption advice.
He said: “This data will help businesses be able to make informed decisions about which measures are likely to have the greatest impact both now and in the longer term.”
Businesses face ‘cliff edge’ challenge
Chancellor Jeremy Hunt has previously hinted that support will be more targeted in future packages for households and companies.
Industry experts Cornwall Insight anticipate that energy-intensive industries such as manufacturing and sectors with high proportions of micro-businesses like hospitality are in particular need of further support beyond the current packages.
These sectors would highly benefit from targeted support beyond next March, given the proportion energy makes of their total cost, and difficulties passing costs on to consumers.
Polling from Uswitch indicates that over half (51 per cent) of SMEs such as shops, hairdressers, and restaurants will raise their prices if the scheme is not extended beyond March.
This would be both painful for customers and risk driving up inflation further.
Its data also suggests over two-fifths (44 per cent) want to see the EBRS extended beyond the deadlines.
Jack Arthur, business energy expert at Uswitch for Business, said: “Given the strong headwinds and soaring cost of doing business, it’s important that businesses don’t face a cliff-edge in April 2023. We are in a long-term energy crisis that demands a long-term response for all those businesses who need it the most.”
Commenting on potential solutions, he encouraged businesses to move to a fixed deal, which “may be the best way to protect against rising wholesale energy prices.”