This afternoon the Government announced further support on energy bills for businesses.
The Government have already provided £18 billion of business support through 2022/23. This is equivalent to 40% of defence spending or c.3 pence on people’s income tax. However, the immediate burden on businesses needs lifting – giving them certainty for the months ahead and allowing them to focus on their priorities, whilst also safeguarding the public finances.
That is why Greg has welcomed news today that the government are providing up to £5.5 billion of new support to see businesses through the next year, helping all businesses to transition to new energy costs, with extra support to those who use the most energy.
It is not sustainable to carry on previous levels of support given the impact on the public finances, and the fact gas prices are now falling. The latest data shows wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced.
The new measures are:
- Introducing up to £5.5 billion of support for non-domestic energy bill payers, protecting British businesses across the country. Today’s announcement consists of further universal support for businesses and targeted support for energy and trade intensive sectors – up to £5.5 billion of taxpayer funded support.
- Providing up to £3.3 billion of universal support for businesses, recognising the volatility of the gas market and giving business certainty. Businesses who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill. This means a typical pub could see a discount of c.£2,300 over 12 months. A typical small retail store could see around £400 off their annual energy bill.
- Providing £2.2 billion extra support to Energy and Trade Intensive Sectors, giving them certainty as markets stabilise. These firms will continue to be supported at source based on a government supported price of £99/MWh for gas and £185/MWh for electricity. This means a typical medium sized manufacturer could receive nearly £700,000 of direct support over 12 months.
- Pushing Ofgem to update on an urgent review as to how the energy market is functioning and whether businesses are getting a fair deal from suppliers. It is clear from conversations with businesses that suppliers are not passing the reduced wholesale prices on and this needs sorting out. The Chancellor has written to Ofgem to ask for an update on a review into the current functioning of the non-domestic market, particularly in relation to smaller businesses, to see whether further regulatory or legislative action is needed to secure a well-functioning market for businesses.
After the Statement, Greg quoted the example of Padbury Meats in Padbury - who wrote to him over the weekend - to make the case as to why energy intensive industries need to be seen in a wider light than just manufacturing, making the case as to why this business and others like them who rely on energy intensive equipment, need similar support.
