Genkii ! Biz Highlight: How the new energy support scheme will work for SMEs
This article will be updated once the energy announcement has been made to the House of Commons later today (January 9).
Energy support is expected to be cut by more than half once the Energy Bill Relief Scheme ends in March 2023.
In place of the current scheme, companies will get a discount on wholesale energy prices, with more energy-intensive industries such as ceramics and steel entitled to a greater discount. This scheme is expected to last until March 2024.
The current scheme caps the cost of gas and electricity for all businesses. Chancellor Jeremy Hunt told business groups last week that it is “unsustainably expensive”.
Support is expected to decrease due to wholesale energy prices falling very sharply in the past few months. They’re now at a lower level than they were before Russia’s invasion of Ukraine. However, they’re still three to four times’ higher than their long-term average.
Nucleus Finance research from 500 SMEs showed that 39 per cent of businesses have had to increase their prices to stay afloat, while 25 per cent have paused investment on innovation and growth to prioritise high daily running costs of the business. Almost a quarter (22 per cent) expect a decrease in their turnover by the end of 2023.
Another survey by Simply Business found that, out of 1,000 small businesses, 54 per cent said that rising energy costs posed the greatest threat to their survival. What’s more, three in five respondents think that the economy is expected to worsen in the next six months.
Analysing the report, Jonathan Portes, professor of economics and public policy at King’s College London, said:“What can the Government do to help? Fuel and energy prices are by far the largest concern, and here the key drivers are global. However, UK conditions have been aggravated by both Brexit and the recent fall in the pound, which further pushes up energy prices, as well as by the operation of the energy market and the price cap.
“Nor does the disconnect between the Prime Minister’s call for a ‘high wage, high productivity’ economy and the insistence that workers have to accept large cuts in real wages help to improve consumer and business confidence. While UK businesses remain resilient in the face of further economic turmoil, they need and deserve a more coherent longer-term strategy for the UK economy.”
The post How the new energy support scheme will work for SMEs appeared first on Small Business UK.
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