Business fears worst over end to energy support scheme

The Government’s decision to scale back support for businesses with soaring energy bills this year has been criticised by small firms, corporates, and academics.

It is believed that help through the Energy Bill Relief Scheme could be slashed by more than two thirds from the end of March.

This could drive small companies to the precipice of collapse, critics say.

In contrast, governments such as Germany and Austria, have pledged to maintain support for businesses throughout the year.

Martin McTague, national chair of Blackpool-based SME champion, the Federation of Small Businesses (FSB) said: “This is so out of touch. Two pence off a kwh of electricity and half a pence of gas is totally insignificant for small businesses, despite costing billions to the taxpayer. The Government will inevitably have to come back.

“The current EBRS scheme provides certainty for a small business owner over their rates, and has made a material difference to the survival of many small businesses. The replacement scheme will do neither.

“While the New Year should be a time of optimism and excitement, 2023 looks like the beginning of the end for tens of thousands of small businesses, which have been relying on the Government energy support to survive this winter.”

He added: “Since the onset of COVID, we’ve lost half a million small firms. Allowing more well-run businesses to go under would be a false economy. But with this absurd degraded Energy Bills Discount Scheme, it looks like we’re getting there.”

Jonathan Andrew, chief executive of Liverpool-based Bibby Financial Services, is equally scathing. He said: “The Government’s rationale for dialling down energy bill support is understandable. But the past few years have served blow after blow for the UK’s small and medium sized enterprises as they bounce from one crisis to another.

“Low on cash, and short of resilience, too many will find themselves on the precipice of collapse come April unless other specific support is put in place.

“Urgent action is required from the Government to provide clear direction to ensure SMEs can access finance, while ensuring the right level of support to keep them growing. Those SMEs that are equipped to build resilience and invest in their futures will play a vital role in leading the UK out of recession.”

Dr Gordon Fletcher, school lead for Research, University of Salford Business School, said: “Under the new scheme announced by the Chancellor last night, it’s concerning to see the level of support slashed by more than two-thirds and the Government now alleviating costs by such an insignificant amount. Something that will be completely unworkable for many businesses and is likely to lead to many having little choice but to close their doors.

“The detrimental impact this could have on companies, their workers and, in turn, the economy is immeasurable.”

He said while the revised scheme is set to provide more support into sectors most prone to high energy costs, such as heavy manufacturing and hospitality, there’s a case to be made for more targeted policies.

And he added: “With the wholesale prices of natural gas and electricity reaching a six-month low on the 4 January, the Government might well be hoping for continued spells of warm weather to help push down overall demand. An irony left unsaid that climate change, caused in part by consuming these fuels, was now helping to reduce the demand to consume even more. However, the warmer weather coincided with the Chancellor Jeremy Hunt describing his own policy as ‘unsustainably expensive.’ An early warning of the direction of thinking at Number 11.

“Meanwhile, the signals are that profits for the major UK energy providers will remain healthy with an October report projecting £170bn in additional profit over the next two years. The Energy (Oil and Gas) Profits Levy should claw at least £9bn of this back into the public purse – or, in other words, about half of the cost of the current Energy Bill Relief Scheme.”

Manchester-based sustainability business, Pilot Group, specialises in energy management systems. Managing director of the energy management division, Lee Morgan, said: “The big question about the Government’s energy bill relief scheme was, what’s next? So it’s good to see that they are extending it until March 2024 to avoid a sudden stop in support for businesses across the UK.”

But he warned: “While the Government’s current aid is welcome, it will be at a reduced cost from April and the pinch is likely to be felt by smaller firms who are already struggling to keep their head above water under the pressure of unprecedented energy bills.”

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