Trade groups fear cap on wholesale energy prices doesn’t go far enough to help businesses
HOSPITALITY industry groups have welcomed measures outlined by the UK Government to cap the wholesale price of energy this winter, but fear the proposals don’t go far enough to help businesses.
Under the Energy Bill Relief Scheme, which was outlined by business secretary Jacob Rees-Mogg today (Wednesday 21st September), the government will provide a discount on wholesale gas and electricity prices for non-domestic customers by setting a ‘supported wholesale price’ which is expected to be £211 per MWh for electricity and £75 per MWh for gas – rates it says are “less than half the wholesale prices anticipated this winter”.
The government said the scheme will apply to fixed contracts agreed on or after 1st April 2022, as well as to deemed, variable and flexible tariffs and contracts; and it will apply to usage from 1st October 2022 and run for “an initial six-month period”. It said business customers do not need to take action or apply to the scheme to access the support, the discount will automatically be applied to bills. The government said it will outline proposed support for non-domestic customers not connected to the gas or electricity grid shortly.
Details of the Energy Bill Relief Scheme – a pledge made by prime minister Liz Truss earlier this month (https://sltn.co.uk/2022/09/08/pm-promises-energy-support-for-businesses/) – have been welcomed by hospitality industry groups. But they have warned that the measures don’t go far enough.
Colin Wilkinson, managing director of the Scottish Licensed Trade Association (SLTA), said: “This is news that 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 as this new scheme caps the wholesale price, and pubs and bars could still be paying 200-300% higher bills than normal.
“The SLTA is concerned this may not be the lifeline we were all hoping for and today’s announcement is not enough.
“We understand that it will take some time for full details to be made clear but our point, and one that is shared by many other business groups, is that businesses will still be expected to pay grossly inflated energy bills which many just cannot afford.
“It is clear to us that more help is required and urgently if we are to stave off business closures in the coming months.”
A spokeswoman for the Night Time Industries Association (NTIA) Scotland said: “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 per cent more than in previous years, which is clearly not sustainable.
“If we are to ensure the survival of our sector it remains imperative that the announcement today is followed up with further action by government in the fiscal event this Friday, and that such action must incorporate our core asks, especially business rates relief and a reduction in VAT across the board.”
Kate Nicholls, chief executive of UK Hospitality, said: “Today’s 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.”
Andrew McRae, Scotland policy chair for the Federation of Small Businesses (FSB), said: “For those who were facing four or five-fold increases in their bills, a reduction on the cost per unit will provide some welcome relief and allow them to plan their way through surviving the winter.
“At the same time, we’re concerned that there is no mention of a cap on rises to standing charges. We’ll need to watch that closely so today’s move leads to a genuine, significant reduction in bills.”
