Business leaders have reacted negatively to Chancellor Jeremy Hunt’s plan to significantly reduce support with energy bills from April.
Hunt met with business groups at the Treasury today, where he warned they will have to get used to lower levels of support with energy bills when the Energy Bills Relief Scheme comes to an end in March.
The Chancellor also confirmed the Government will finally tell businesses its plans for further financial relief in the House of Commons next week.
Support is now expected to be at a lower level and designed to help businesses shift to a new reality of elevated energy bills while avoiding a cliff edge in support
Emma McClarkin, chief executive of the British Beer and Pub Association boss urged the Chancellor to extend the scheme or “risk losing businesses across the UK that mean so much to so many.”
She feared that without extended support at close to current levels, pubs and brewers in communities across the country could be lost for good.
Energy costs are the single biggest threat to our industry right now…Emma McClarkin, chief executive of the British Beer and Pub Association
The industry boss said: “Energy costs are the single biggest threat to our industry right now. The failure to safeguard pubs and breweries from price increases come April will be the last straw for businesses who have been struggling for three years to remain solvent and serving their communities.
Sacha Lord, the night time economy adviser for Greater Manchester, also called on support at its fullest must be maintained for UK companies.
He said: “I urge the Chancellor to understand the depths of the crisis and listen to the swathes of business voices across all industries calling for help.
“The UK’s industry sectors are intertwined, and after the jolts of the past three years and the resolve that all industries have shown in their bid for recovery, it would be a failure of this new Government to simply stand by and let business fall at the last hurdle.”
Hunt: Taxpayers can’t shield businesses forever
Currently, the Energy Bills Relief Scheme subsidises bills at a rate of £345 per MWh for electricity and £91 per MWh for gas.
This has cost an estimated £18bn with the Treasury forecasting this could potentially double or triple if international energy prices increase further than expected.
Hunt told businesses it was vital that the taxpayer’s “exposure to volatile international energy prices” is reduced.
Gas prices on the spot market have been declining with Cornwall Insight forecasting sharp drop-offs in the energy price cap for households at the end of the year.
However, with businesses typically on long-term contracts for energy, it could take time for this be felt in their bills.
Jack Arthur, business energy expert at Uswitch for Business, noted that over half of small businesses such as shops, restaurants and hairdressers have said they’ll have to increase their prices if the Energy Bill Relief Scheme is not extended beyond March.
In his view, it was vital for businesses to make sure their deals were not requiring them to overpay.
He said: “As we continue to wait for an announcement on non-domestic energy support, it’s important that businesses check their gas and electricity tariffs and ensure they are not overpaying, especially if they have fallen out of contract.
Alex Hall-Chen, principal policy advisor for sustainability, skills and employment at the Institute of Directors, believed support needed to be targeted to sectors especially exposed to volatile international energy markets.
She said: “It is a shame that the government has not found a way to target the support to those sectors of the economy particularly exposed to volatile international energy markets.
“This means that the most vulnerable businesses will lose support at a critical time compared to what they have had this winter. We would encourage government to reassess how it can provide additional ongoing support to those firms.”
Business groups at the roundtable included the Confederation of British Industry, Federation of Small Businesses, British Chambers of Commerce, Institute of Directors, Make UK ,UKHospitality, and British Beer & Pub Association.