Industry welcomes energy bill cap but warns more help is required


The much anticipated cap on wholesale costs for business was unveiled by the UK Government earlier this week. Now, under the Energy Bill Relief Scheme,  energy suppliers will adhere to a capped wholesale price of 21.1p per kilowatt-hour for electricity and 7.5p/kWh for gas when calculating rates for business customers until March 2023

Although this means that from October, businesses should see their electricity bill to be half of the current expected cost with saving of up to a quarter for gas, it will still mean that hospitality business are going to see high energy bills.

NTIA Scotland, said,  “We welcome the long-awaited announcement of the “Energy Bill Relief Scheme” for businesses. However we remain concerned that this measure to cap the wholesale price to Energy supply companies may not result in sufficient relief being extended to business customers, given that energy suppliers remain free to impose additional mark-ups such as network charges and operating costs, which are uncapped.  The net result of this could be a position where small businesses are still being asked to pay unaffordable energy bills of several hundred percent more than in previous years, which is clearly not sustainable.

“While we acknowledge that it will take some time for details and final pricing to businesses to become clearer, we also note that this proposal will exclude businesses that renewed before the 1st April where energy costs are still untenable, and does nothing to alleviate the high levels of energy supply debt incurred by businesses exposed to uncapped pricing over the last few quarters, and in isolation is unlikely to be enough to ensure businesses have the financial headroom to survive this winter.

“If we are to ensure the survival of our sector it remains imperative that the announcement  is followed up with further action by Government, and that such action must incorporate our core asks, especially business rates relief and a reduction in VAT across the board.

“We will now have to wait for the announcement on Friday(today)  from the Chancellor on further support, however, we must note that the measures being discussed to date such as corporation tax relief will simply not be sufficient, given only one in four hospitality businesses would currently benefit from such measures, as three out of four are not trading profitably.

“We also urge Scottish Government to immediately pass on to businesses the full 12 months of business rates relief at 50% discount already funded by the Treasury for businesses across the UK, rather than the much reduced 3 months of 50% relief that was made available from Scottish Government to businesses in Scotland.”

UKHospitality CEO, Kate Nicholls, said, “This intervention is unprecedented and extremely appreciated as we head into an uncertain winter with numerous challenges on many fronts.

“The announcement will give businesses some confidence to plan for immediate survival but we will not relent in our pursuit of a more comprehensive package to safeguard businesses and jobs. The levers of reduced VAT and business rates reliefs are still available to the Government, and there must also be a comprehensive package to ensure that there is no cliff edge when these measures fall away.”

Matthew Fell, CBI Chief Policy Director, said, “We welcome government’s quick and decisive action to provide hard-pressed businesses with a substantial short-term fix to a long-term problem.

“The package will ease worries about otherwise viable businesses shutting-up shop and smaller companies especially will benefit from the discounted rate.

“Businesses will also want to know more about the exit strategy and what happens when the six-month cap runs out. Working closely with business will be key to successful implementation.

“The long-run solution is to double-down on energy security and to incentivise firms to push ahead with ambitious energy efficiency programmes to lower demand.”

Category: News
Tags: Energy Bill Relief Scheme, Energy bills, NTIA Scotland, UKHospitality