Energy Relief Scheme 'not the lifeline' hoped for

By Rebecca Weller

- Last updated on GMT

Won't live up to the hype: sector fears Energy Relief Scheme will not be enough to ensure survival (Credit: Getty/Selitbul)
Won't live up to the hype: sector fears Energy Relief Scheme will not be enough to ensure survival (Credit: Getty/Selitbul)

Related tags Energy costs Legislation Government

Industry leaders “remain concerned” the Energy Relief Scheme will be “no way near enough” to help struggling hospitality businesses through the winter.

Under the scheme​, announced yesterday (Wednesday 21 September) by Business Security Jacob Rees-Mogg, wholesale gas prices are expected to be fixed for all non-domestic energy customers at £211 per mWh for electricity and £75 per mWh for gas for six months.

However, the Scottish Licensed Trade Association (SLTA) stated while it welcomed the announcement, it warned it may not be enough.

SLTA managing director Colin Wilkinson said: “This is news we have been waiting for and obviously we welcome it but when you look beyond the headlines it doesn’t live up to the hype.

“This new scheme caps the wholesale price and pubs and bars could still be paying 200-300% higher bills than normal; there are pubs and bars currently on a rate of 90p per kWh, in comparison to 15p in normal times.

“The Government says the current wholesale price of gas is about 42p per unit therefore businesses should see a reduction of 21p in their unit price but this still means much higher bills than before the energy crisis.

Not enough 

“Nothing in the plan tackles the problems of large deposits and bonds, particularly for the SME independent sector, nor restricts the additional margins made by the energy suppliers.

“The SLTA is concerned this may not be the lifeline we were all hoping for and today’s announcement is not enough.”

Furthermore, Night-Time Industries Association (NTIA) CEO Michael Kill expressed fear reducing the wholesale price to energy supply companies would not result in “sufficient relief” for non-domestic customers due to energy suppliers remaining free to impose uncapped additional mark ups such as network charges and operating costs.

Kill added while it would understandably take time for the full details of the scheme to be made clear, the proposal excluded businesses which renewed before the 1 ​April and did not “alleviate high levels of energy supply debt” due to uncapped pricing over the last few quarters, rendering the scheme in isolation “unlikely to be enough”. 

He said: “If we are to ensure the survival of our sector it remains imperative the short-term relief announced today is extended to 12 months and followed up with further action by the Government.”

Echoing this, Night-Time Economy Advisor for Greater Manchester, Sacha Lord, yesterday stated “only time will tell​” if the Government had gone far enough to help businesses.

This comes as the Government yesterday announced Chancellor Kwasi Kwarteng would hold a ‘mini-budget’ on Friday 23 September, with many across the sector calling for further support to ensure the sectors survival.

Breaking point 

However, some operators felt the Government had already done its best to help businesses.

In a Twitter post yesterday, licensee of the Three Colts, Buckhurst Hill, and the Owl, High Beech, Essex, Adam Brooks said: “I personally do not think the Government could have done anymore with the Energy rates here.

“It’s a huge intervention. It doesn’t stop many businesses still paying unaffordable amounts, but it caps the runaway train for many.”

Though Brooks, and many others across the sector including Lord and the NTIA, also stressed the Chancellor needed to provide VAT cuts and business rates holidays, as part of the ‘mini-budget’.

Wilkinson added: “We already know some pubs and restaurants are considering closing​ over the winter period because they are unable to absorb recent sharp increases in energy bills at a time when they are recovering from the pandemic and paying off debts incurred during Covid.

“Many are at breaking point and we now hope for some good news for businesses in new Chancellor Kwasi Kwarteng’s min-Budget on Friday."

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