Sector 'disappointed' by energy update

By Rebecca Weller

- Last updated on GMT

Last straw: trade bodies 'disappointed' as Gov slashes energy support by 70% (Credit: Getty/seanliew)
Last straw: trade bodies 'disappointed' as Gov slashes energy support by 70% (Credit: Getty/seanliew)

Related tags Legislation Government Finance Energy Bills Discount Scheme

Trade bodies across the sector have expressed “disappointment” with the “out of touch” Government’s decision to reduce energy support for businesses.

This follows Chancellor of the Exchequer Jeremy Hunt’s announcement yesterday (Monday 9 January) that the Energy Bill Relief Scheme would be replaced with the Energy Bill Discount Scheme​ from Saturday 1 April, reducing the support businesses will receive by 70%.

Night-Time Industries Association (NTIA) CEO Michael Kill said: “The announcement [yesterday] once again outlines how out of touch the Government are with businesses.

“Even under the current relief scheme, greedy, profiteering energy companies are subjecting businesses to over 400% increase on previous energy bills.

“The scaling back of the energy relief scheme will without doubt mean thousands of businesses and jobs will be lost in the coming months.”

The Energy Bill Discount Scheme will see businesses paying higher energy prices receive a capped discount on wholesale gas prices worth £5.5bn until March 2024, in place of the current support package worth £18bn.

Last straw 

Speaking in the House of Commons yesterday, Hunt claimed the current plan was “unsustainably expensive” and while wholesale gas prices had seen a reduction since Putin’s invasion of Ukraine, the new scheme will provide more “reassurance” against the risk of prices rising again.

British Beer & Pub Association (BBPA) chief executive Emma McClarkin said: “We are very disappointed by the Treasury’s announcement which will mean a dramatic drop in extended energy support relief for pubs come April. 

“While the Government has accepted the need for continued energy bill support for another 12 months, the reduction in the level of this support is extremely worrying and comes at a time of acute pressure on pubs.  

“We are aware of the pressure public finances are under, but energy costs are the single biggest threat to the industry right now to once strong healthy businesses.   

“Significant price increases will be the last straw for businesses who have been struggling for three years to remain solvent and serving their communities.”

Additionally, UKHospitality (UKH) chief executive Kate Nicholls said while she was “relieved” support had been extended as a whole, an extension to the current level of support was “crucial” as it had been a “lifeline” for many this winter.

Concerted change 

Moreover, the lower level of support could see an “unsustainable” £4.5bn price hike in bills for the sector, according to UKH analysis.

She added: “With no further, dedicated support for a vulnerable sector like hospitality, I’d urge the Government to consider other measures it can take to help the sector.

“One measure in particular that would make a significant difference would be increasing the business rates relief cap.

“For those suppliers to hospitality in the wider food and drink sector that have received additional support, we expect them to support the sector accordingly in their pricing.”

Nicholls also called for “concerted change” in the behaviour of energy suppliers, urging them to be “reasonable” with quotes and see the OFGEM review detailed by the Chancellor yesterday as a “wake up call” and allow businesses to “renegotiate” fixed deals.

She added: “This is an extremely challenging period for the UK’s hospitality sector, which is so important to the economy and communities, and it’s essential the sector gets through it as best it can.

“If it does, I’m confident we can reach a situation where hospitality will return to generating economic growth, delivering hundreds of thousands of jobs, and investing in Britain’s high street and communities. This is all while it contributes billions to Treasury revenues.”

Vastly reduced support

The Scottish Licensed Trade Association (SLTA) has expressed “very serious concerns” over the new energy support scheme.

SLTA managing director Colin Wilkinson said struggling hospitality businesses were desperate for financial support and queried how effective this new scheme will be.

He said: “Many businesses in the hospitality sector in Scotland have had a bitterly disappointing December – normally one of the year’s key trading periods for the sector – as a direct result of the economic crisis, train strikes, poor late-night public transport and lack of taxi provision in some towns and cities. We’re into the second week of January and these challenges remain.

“So, to hear that the current energy scheme is to be replaced with one that offers a discount on wholesale prices rather than a fixed cap price means businesses will receive a vastly reduced level of support – understandably, we have very serious concerns about the impact this will have on the hospitality sector.”

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