Sector Reacts to Chancellors Energy Support Reduction of 70%

Sector leaders have reacted with dismay following yesterday’s announcement by Chancellor Jeremy Hunt that energy support for businesses is to be cut from Saturday, April 1.

The Chancellor detailed a new “Bill Discount Scheme” which will replace the “Energy Bill Relief Scheme” when it expires in March.

Businesses paying higher energy costs will see a unit discount of up to £6.97/MHh automatically applied to their gas bill and a discount of up to £19.61/MWh apply to electricity bills however this scheme set to run until March 31, 2024 will not apply to businesses paying lower energy prices.

The reduction has been criticised by sector leaders, UKHospitality Chief Executive Kate Nicholls said: “It was crucial for hospitality businesses to receive an extension to energy support, which has been a vital lifeline for many this winter.

“While I’m relieved the Chancellor has listened to UKHospitality’s concerns and extended the scheme as a whole, the absence of a sector-specific package that helps vulnerable sectors like hospitality will still result in higher bills. Our analysis shows the new, lower level of support will see a total £4.5 billion hike in bills for the sector compared to the previous scheme.

“This will simply be unsustainable for many. 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.

“Now we have some clarity on the future of energy support, we must see a concerted change in behaviour by energy suppliers, who have been unfairly treating businesses with outlandish quotes and unjustifiable demands for enormous deposits or pre-payments. Government must act swiftly if this is not forthcoming.

“This scheme is a significant investment from the Government and energy suppliers should not be using that as an excuse to hike up prices. The Ofgem review into the non-domestic market should serve as a wake-up call to suppliers that now is the time to be reasonable with the quotes they’re offering and to abandon unfair demands of businesses to secure fixed deals. They should also consider allowing businesses to renegotiate if they are stuck on previously agreed, inflated fixed deals.

“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.”

CAMRA Chairman Nik Antona said: “The prospect of energy bills soaring in April as other costs keep rising and consumers tighten their belts will leave the nation’s pubs, social clubs, brewers and cider producers apprehensive about how they can continue to make ends meet.

“While we want to see energy support reinstated at current levels, it is now vital that the Chancellor uses his Budget in March to announce a wider support package if our pubs are to survive and thrive. This must include proper reforms to fix the unfair burden of business rates and introducing the new lower rate of duty charged on draught beer and cider at 20% below the general duty rate. This would help keep pub-going affordable for customers and give our locals a fighting chance against the likes of cheaper supermarket alcohol.”

Michael Kill CEO NTIA Says: “The announcement today 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.”

“All of this in light of the fact that gas/oil wholesale prices in recent months have dropped below the levels prior to Russia’s invasion of Ukraine.”

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