Government urged to reassess how it can target energy bill support to vulnerable businesses

Business groups are expecting Government help with their energy bills to be halved after March, when the existing package of support expires.

Chancellor Jeremy Hunt told business groups on Wednesday that the support would be at a lower level to protect the public finances from volatile energy markets. Gas and electricity prices have been fixed for firms until the end of March. The revised scheme is expected to run for 12 months until March 2024, with details on the level of support detailed next week.

Responding to the latest developments with the government energy support package, Tina McKenzie, Alex Hall-Chen, Principal Policy Advisor for Sustainability, Skills and Employment at the Institute of Directors, said “The Energy Bill Relief Scheme has been a crucial intervention, with our research showing that it removed a serious risk to around a quarter of businesses this winter. Businesses will be reassured that support will continue in some form for a further 12 months.”

“However, 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.”

“It is also crucial that government steps up its efforts to improve the security of the UK’s energy supply and support businesses to implement energy efficiency measures throughout their operations. In this way, we can reduce the UK’s future vulnerability to adverse developments in global energy markets.”

Whilst Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB) said “Small firms are still very much in the dark on whether they’ll continue to be supported on energy bills when the current Energy Bill Relief Scheme (EBRS) expires in March.”

“We made it clear in our meeting with the Chancellor today that we can’t afford a cliff-edge scenario that would see a raft of business failures. The Government must announce energy support plans as soon as soon as Parliament returns next Monday.”

“With the current scheme ending in three months, it’s been impossible for small firms to plan their 2023. We’ve heard countless examples of small businesses on the brink of collapse because of sky-rocketing energy bills and the lack of assurance from the Government on energy support, from the Bed & Breakfast in the Lake District that has closed for the winter to bring down bills to the fish and chip shop in the East Midlands which would fall into the VAT system, adding yet more cost, if it raises prices to cope with energy costs.”

“Let’s not forget this energy price crisis affects all small businesses, which typically have lower margins and are least able to deal with cost pressures. That’s why we want to see an extension of the energy support scheme which takes into account the size of the business, rather than focused on specific sectors. This will help restore hope and optimism and grow our economy, as the Prime Minister pledges today.”