Business energy cap announcement ‘lacks detail’

By Nikkie Thatcher

- Last updated on GMT

Info required: trade bodies have called for further details on the energy price cap announcement (image: Getty/coldsnowstorm)
Info required: trade bodies have called for further details on the energy price cap announcement (image: Getty/coldsnowstorm)

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Prime Minister Liz Truss has announced a new six-month strategy to combat energy cost rises for businesses, including hospitality firms, that give the equivalent support to those offered to domestic households but for a shorter time period.

The scheme, which was announced in the House of Commons today (Thursday 8 September), will be reviewed after six months to see if the help should be targeted at specific sectors, with the possibility of it being extended to more vulnerable firms such as hospitality.

It will mean energy costs are capped at the same price per unit that consumers pay under these new plans.

However, the household plan for domestic customers is set to be in place for two years. This included a price cap, which will be fixed at £2,500 a year from 1 October.

According to Truss, this will save the average household £1,000 a year, in addition to the £400 discount on bills, which was previously announced.

Half measure package

She added: “We will deliver this by securing the wholesale price for energy while putting in place long term measures to secure future supplies at more affordable rates.”

The trade reaction was a mixed bag with the Night-Time Industries Association slamming the announcement, labelling it a “half measure package” but was concerned about the lack of “considerable detail to alleviate current business concerns”.

However, the British Beer & Pub Association (BBPA) said committing an energy price cap for businesses showed Truss understood how critical the energy crisis had become for the sector alongside the importance of the industry to communities.

Chief executive Emma McClarkin added: “This intervention will help thousands of business owners to breathe a little easier over energy bills in the coming winter months.

“This announcement will avert the immediate threat of the energy crisis for businesses but we need clarity and assurance for the long-term so our brewers and pubs can plan effectively and thrive at their heart of their communities long into the future.

“The cost of doing business is still a very real threat for many but we are encouraged by the direction this Government is going in. Now we need to hear more on business rates, VAT and keeping beer duty low.”

Simply unviable

Furthermore, the British Institute of Innkeeping CEO Steve Alton also responded to the announcement, echoing the other calls for further detail on the strategy.

He said: “We have left Government in no doubt about the crushing impact of energy costs on our members’ pub businesses and we are pleased that this has been specifically recognised in today’s announcement. 

“Beyond the impact of energy, pubs across the nation have seen their long hoped for recovery stopped in its tracks by chronic staff shortages, repaying pandemic specific debts, a crippling rise in the cost of doing business through inflationary rises and a squeeze on consumer spending, with many pubs already loss making.

“Escalating energy costs have rendered long-standing essential local businesses simply unviable.  We await the detail on how this price guarantee will be applied for our nations’ pubs and the impact that this will have on their survival.

"Today’s announcement looks to tackle the specific energy issue and we look forward to again working closely with Government to urgently deliver the wider package of investment that will be needed to allow our members to trade through these exceptional challenges and be at the heart of growth in our economy.”

Swift cash injection

UKHospitality (UKH) chief executive Kate Nicholls said: “We very much welcome the Prime Minister’s recognition of the specific struggles the hospitality industry faces and the promise of further support, alongside her positive plan to help consumers and businesses tackle rising energy bills.”

Nicholls added UKH is looking forward to working with the new Government on developing plans that will support long-term recovery for the sector but said support will be needed at all businesses this autumn and winter if they are to make it through to spring.

She said: “Measures need to provide a swift cash injection, such as cutting VAT for the sector to 10% and providing business rates relief.

“While the welcome energy price freeze will ease the pressure on our customers and colleagues, high bills will still constrain spending in the sector and operators will still have to fund energy bills and other rising costs.

“For many hospitality businesses, this will prove too much to bear and hundreds of community assets will be shut and jobs lost unless additional support is brisk and bold.” 

Truss also said new Chancellor Kwasi Kwarteng will outline a fiscal statement later this month with the expected costs of the energy package.

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