Industry reaction to the Energy Bills Discount Scheme

Eligible energy-intensive industries will receive a discount on what they pay for their gas and electricity.

The U.K. government’s decision to slash its level of energy bill support for businesses has been labelled “out-of-touch” by the Chair of the Federation of Small Businesses, Martin McTague.

However, other industry leaders and business owners have been more favourable in their reaction – but with caveats.

“The decision to all but eliminate help through the Energy Bill Relief Scheme (EBRS) is a huge disappointment for small businesses,” said McTague.

“For those struggling, the discount through the new version of the scheme is not material. Many small firms will not be able to survive on the pennies provided through the new version of the scheme.”

What does the support now look like?

From April onwards, help will drop from its current level of £18 billion to £5.5 billion, to limit taxpayers’ exposure to volatile energy markets, the government said.

Businesses, charities and other non-domestic energy users will receive a discount on high energy bills until 31st March 2024.

For eligible non-domestic customers who have a contract with an energy supplier, the new scheme will mean that they 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.

The discount will be applied from 1st April to 31st March 2024.

The Treasury explained that this will be subject to a wholesale price threshold of £107/MWh for gas and £302/MWh for electricity, meaning that businesses facing energy costs below this level will not receive support.

Eligible energy-intensive industries will receive a discount reflecting the difference between a price threshold and the relevant wholesale price.

The price threshold for the scheme will be £99/MWh for gas and £185/MWh for electricity.

The government said this discount will only apply to 70% of energy volumes and will be subject to a “maximum discount” of £40/MWh for gas and £89.1/MWh for electricity.

Chancellor 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.”

“All help is very welcome”

Food and Drink Federation Chief Executive Karen Betts told that it was a step in the right direction.

“Manufacturers are under a great deal of pressure as they try to keep their heads above water while absorbing very high and volatile energy costs in order to keep the cost of everyday food and drink as low as possible for shoppers,” she said.

“This support recognises the criticality of the food and drink supply chain and that our businesses use constant levels of energy year-round and it should help to slow record levels of food and drink inflation.”

Meanwhile, Adrian Hanrahan, managing director of Robinson Brothers, a chemicals producer in West Bromwich, said, “all help is very, very welcome.”

But he added: “We’re a small company, our energy is tripling this year which means that being a small company we have one pot of money.”

Greg Pilley, managing director of Stroud Brewery, says their energy bill will triple and feels the government have been too reactive in their handling of the business energy crisis.

“Overall increasing energy prices are affecting the cost of everything – our cleaning caustic chemicals have gone up threefold, our aluminium cans have gone up, malt has gone up by 20%. It’s not just our energy that’s gone up, all our supplies have correspondingly gone up, part of which is the cost of energy to them and so it’s a cumulative thing,” he pointed out.

“Prior to things going bad, our energy was about £33,000 a year – it is now looking like about £100,000 a year without any subsidy or support. With prices being held till March that kept things fairly in line with our former costs.

“They’re extending some support ’til the following March so that’s got to be welcomed but in a way, it’s a bit late because everybody’s already put their prices up and they’re not going to come down in a hurry.

“What we would have liked to have seen would have been an announcement much sooner before people had put their annual prices out. Electricity is not the only rising cost, it’s indicative of everything else that’s going up.”

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