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Business energy support to be cut from April

Business energy support to be cut from April umbrella.UK insolvency web

Business energy support to be cut from April umbrella.UK insolvency web

Most businesses will see their energy bills increase this April after the government announced it would scale back support for non-domestic users.

A new scheme won’t provide as much support as the Energy Bill Relief Scheme (EBRS), which expires at the end of March.

Currently, the EBRS scheme caps the unit cost of gas and electricity at £75 per MWh and £211 per MWh respectively.

This will be replaced by a new scheme that offers non-domestic users a discount on wholesale prices, rather than a government-guaranteed fixed price.

Under the new scheme, bills will automatically be discounted by up to £6.97 per MWh for gas and up to £19.61 per MWh for electricity.

Exchequer secretary to the Treasury James Cartlidge said this would roughly work out to a £2,300 annual saving for a pub.

Some businesses that operate in energy-intensive sectors such as steel, glass and ceramics will get a bigger discount than others.

But firms will only benefit when energy bills are high. The new scheme will run until the end of March 2024.

The Chancellor Jeremy Hunt previously told business leaders that the current scheme was ‘unsustainably expensive’.

The previous scheme cost the Treasury around £18.4bn in just six months, while the new scheme is expected to cost £5.5bn for 12 months of support.

The Federation of Small Businesses said the announcement was a ‘huge disappointment’.

National chair Martin McTague said: “Many small firms will not be able to survive on the pennies provided through the new version of the scheme.

“While the New Year should be a time of optimism and excitement, 2023 looks like the beginning of the end for tens of thousands of small businesses, which have been relying on the government energy support to survive this winter.”

Speaking to the BBC, the chief executive of Gusto Restaurants, Matt Snell, said that the group’s energy costs had more than doubled.

“Even with the so-called government support in place our bill went up by over £800,000 so it is forecast to be £1.5m for this year,” he said.

Mr Snell also highlighted the ‘ridiculous’ deposits and other costs associated with delivering gas to their restaurants, including sites in Alderley Edge, Cheadle Hulme, Didsbury, Knutsford and Manchester.

He said: “We ourselves at Gusto had to pay £150,000 just to enter a contract.”

He continued: “What a lot of people don’t understand is that the cost for delivery to your building can almost double what the wholesale cost of gas is and that is completely unregulated.”

Tom Fox, Licensed Insolvency Practitioner at Umbrella.UK Insolvency said: “Any government help is welcome, but I worry that scaling back support on energy will mean the end for many firms that are just about coping with current prices.

“Some firms will be hit harder than others, and it’s important they prepare for whats to come.

“The good news is that wholesale energy prices are starting to come down, even if we’re not seeing that in bills just yet. Energy prices are now lower than they were when Russia invaded Ukraine, but they’re still very high by historical standards.” 

Are you worried about the financial health of your business? Speak to a member of our business insolvency team today for free advice. Call: 0800 611 8888.