A six-month energy support scheme for businesses was welcomed yesterday by leading industry groups as vital to help keep companies afloat this winter, but quickly prompted warnings that support would need to be extended.
After growing calls for emergency aid amid mounting energy costs, the government moved to cut the wholesale price of energy for businesses and public organisations by more than half.
The support will apply to energy use from next month to the end of March and the level of price reduction will depend on a businesses’ contract type and circumstances.
The support was described as “significant” by the British Chambers of Commerce, which said it would ease cost pressures piling up on businesses and allow many firms facing closure, staff or output cuts, to keep going.
Echoing a number of other cross sector business groups, however, Shevaun Haviland, director general of the BCC, said six months of support was insufficient to enable bosses to make investment plans for the future.
“We understand there are a range of unknowns for the government, but without further reassurance very few firms will make plans to invest or grow.”
The Department for Business, Energy & Industrial Strategy plans to publish a review of the scheme in three months to help determine what support will be available after March.
Michael Kill, chief executive of the Night Time Industries Association, whose members include clubs, bars, and casinos, called for the relief to be extended to 12 months in addition to further support at the government’s fiscal statement tomorrow, including business rates relief and a reduction in VAT.
The government’s review of the energy support scheme will be particularly focused on identifying the most vulnerable companies.
Roy Allkin, chairman of the Society of Independent Brewers, said “serious questions remain about the criteria being used to identify the most vulnerable businesses”.
The wide-ranging nature of the initial support was criticised by Darren Jones, the Labour chairman of the Commons Business, Energy and Industrial Strategy committee, who said “capping the price for all businesses is a waste of taxpayers’ money, which should be targeted at those which need it the most. Why should British taxpayers collectively get into even more debt to hand over public funds to Amazon?” Amazon was approached for comment.
Andy Mayer, energy analyst at the Institute of Economic Affairs, the free market think tank, also said targeted support, and tax cuts, would have been “a more effective solution, encouraging less energy use, while rewarding those who had already invested in energy”.
Analysts at Jefferies, the City broker, estimated that without the government’s intervention business energy tariffs would have doubled from current levels.
