UK businesses call on government to outline support amid '500%' energy bill increase

Concerns rise that some firms will face 'cliff edge' in six months if they don't qualify for ongoing support

A cap of £2,500 from October 1 for average household energy bills in England, Scotland and Wales has already been announced by the government. PA
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As Jacob Rees-Mogg, the UK's secretary of state for business, energy and industrial strategy, puts the finishing touches on his package to help struggling companies with their energy bills, businesses are calling for certainty about the type of support they will receive.

On Wednesday, Mr Rees-Mogg is expected to announce how companies, schools, hospitals, charities and other non-domestic consumers will be spared some of the pain of rising gas and electricity bills.

A cap of £2,500 ($2,841) from October 1 for average household energy bills in England, Scotland and Wales has already been announced by the government, but while businesses have been promised equivalent support, they have been waiting for details as officials have been drawing up a bespoke programme.

As businesses have not benefited from the existing energy price cap and are not always able to fix their energy price through fixed deals, many are reporting projected increases in energy costs of more than 500 per cent.

The government is planning a six-month programme for all non-domestic energy users, but this will then be replaced with a targeted system focused on the most vulnerable industries.

Prime Minister Liz Truss suggested pubs could be covered by the longer-term support.

“The business secretary is conducting a review of exactly which businesses will be included — that review will be completed within three months,” she told ITV News in New York.

“I can reassure people who own pubs that they are exactly the type of businesses that will get that longer-term support.”

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“Our latest research shows near two thirds of small firms are paying more for energy this year compared to last year, with two in five seeing double, triple or even higher increases in their bills,” said Tina McKenzie, policy chair of the Federation of Small Businesses.

“We hope the energy price guarantee means an equivalent amount of support per unit of energy, to the support which households are receiving.

“It should give businesses some degree of certainty over their energy prices for six months, so they can plan confidently for the winter.

“At the moment, they cannot plan and they are awaiting the announcement tomorrow to be the moment when they can.”

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The complexity of setting up a new programme has led to concerns support for firms may not be in place by October 1, and the federation said help should be backdated if the system is not up and running by then.

“Many small firms have October 1 as their start date for new contracts, so we’d like to see the price guarantee comes into effect then for those who sign new contracts from then, but also those who have been locked into contracts since prices in quotes rose astronomically in recent months,” Ms McKenzie said.

“There should also be a backdating commitment now, especially if it’s not rolled out until November.”

She also raised concerns about the prospect of a “cliff edge” in six months for businesses which may not qualify for ongoing support.

“There are no such things as ‘vulnerable sectors’ and ‘non-vulnerable sectors’ when it comes to these energy hikes, so we will be encouraging government to take a broader approach to this so that all those that continue to be deeply affected are covered,” Ms McKenzie said.

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Updated: September 21, 2022, 3:55 AM