A new energy scheme for businesses has been announced by the government, but there’s concern that there’s no sector specific help for hospitality.
The new scheme will mean all eligible UK businesses and other non-domestic energy users will receive a discount on high energy bills until 31st March, 2024.
The government says this will help businesses locked into contracts signed before recent substantial falls in the wholesale price manage their costs, and provide others with reassurance against the risk of prices rising again.
The announcement aims to strike a balance between supporting businesses over the next 12 months and limiting taxpayers’ exposure to volatile energy markets, with a cap set at £5.5 billion.
From 1st April, 2023, until 31st March, 2024, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh (megawatt hour) automatically applied to their gas bill, and a unit discount of up to £19.61/MWh applied to their electricity bill, except for those benefiting from lower energy prices.
A substantially higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive, predominately manufacturing industries. This includes brewers and cider makers.
“Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine,” said chancellor, Jeremy Hunt. “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 action is needed to make sure the market is working for businesses.”
UKHospitality chief executive, Kate Nicholls, said: “It was crucial for hospitality businesses to receive an extension to energy support, which has been a vital lifeline for many this winter.
“While I’m relieved the chancellor has listened to UKHospitality’s concerns and extended the scheme as a whole, the absence of a sector-specific package that helps vulnerable sectors like hospitality will still result in higher bills.
“Our analysis shows the new, lower level of support will see a total £4.5 billion hike in bills for the sector compared to the previous scheme.
“This will simply be unsustainable for many. With no further, dedicated support for a vulnerable sector like hospitality, I’d urge the government to consider other measures it can take to help the sector. One measure in particular that would make a significant difference would be increasing the business rates relief cap.
“For those suppliers to hospitality in the wider food and drink sector that have received additional support, we expect them to support the sector accordingly in their pricing.”
Kate added: “Now we have some clarity on the future of energy support, we must see a concerted change in behaviour by energy suppliers, who have been unfairly treating businesses with outlandish quotes and unjustifiable demands for enormous deposits or pre-payments. Government must act swiftly if this is not forthcoming.
“This is an extremely challenging period for the UK’s hospitality sector, which is so important to the economy and communities, and it’s essential the sector gets through it as best it can.
“If it does, I’m confident we can reach a situation where hospitality will return to generating economic growth, delivering hundreds of thousands of jobs, and investing in Britain’s high street and communities. This is all while it contributes billions to Treasury revenues.”
Emma McClarkin, chief executive of the British Beer & Pub Association, said the organisation was very disappointed by the Treasury’s announcement, which will mean a dramatic drop in extended energy support relief for pubs come April.
“Whilst the government has accepted the need for continued energy bill support for another 12 months, the reduction in the level of this support is extremely worrying and comes at a time of acute pressure on pubs,” she said.
“We welcome the recognition of breweries as energy and trade intensive, and this will help alleviate some of this pressure in our sector, but we have been clear with government about the continued vulnerability of businesses across our industry and the ongoing challenges pubs and breweries face.
“We are aware of the pressure that public finances are under, but energy costs are the single biggest threat to the industry right now to once strong healthy businesses.”