Worries firms could go out of business as energy support changes
It's claimed some companies could struggle to survive, as the UK Government make changes to the energy bill support from April
There's worries some firms could go to the wall as the UK Government announces changes to its energy bill support.
From April the scheme will see companies get a discount on wholesale prices, as opposed to the current system where they have their costs capped.
This set-up will run until the end of March 2024, with a cap set on it to limit the cost to the taxpayer.
Larger discounts will be handed out to high energy-using sectors.
It means businesses will only benefit when electricity and gas bills are high.
The Federation of Small Businesses (FSB) in Scotland has voiced concerns over what it called "the dramatic scaling back of energy bill support for small businesses."
Andrew McRae, FSB Scotland Policy Chair, said:
“Small businesses have been calling for some certainty on energy prices for months, but many will be forgiven for wondering whether today’s statement was really worth waiting for.
“This is a significant reduction in support – and it will have real-world impacts.
“Energy costs are still the single biggest challenge for many of our members, with six in ten reporting utilities as the main driver of cost increases. By switching the support from a cap to a discount on wholesale costs, businesses are once again at the mercy of the global events that drive those prices.
“This creates more uncertainty. With a wholesale unit price cap, you can at least plan ahead. But with a mere discount on wholesale prices, many businesses will fear the next spike in energy costs and how high they might go. This will make it harder for firms to bid for fixed-price contracts, or to decide when, or if, they’ll open in the first half of the year.
“On top of the withdrawal of the vast majority of energy price support, this decision also risks stoking inflation through higher business bills. The original EBRS scheme suppressed inflation by 5 points, but this has been cancelled today – just as we enter a recession.”
Chancellor of the Exchequer Jeremy Hunt said: "Wholesale energy prices are falling and have now gone back to levels just before Putin's invasion of Ukraine.
"But to provide reassurance against the risk of prices rising again we are launching the new energy bills discount scheme, giving businesses the certainty they need to plan ahead.
"Even though prices are falling, I am concerned this is not being passed on to businesses, so I've written to Ofgem asking for an update on whether further action is needed to make sure the market is working for businesses."
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