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This Wednesday, the Chancellor announced an extension of the UK’s Energy Price Guarantee for households until June. However, small businesses seem to have been left out of the deal.
Originally set to expire in April, the Energy Price Guarantee caps average household energy bills at £2,500 annually. This three-month extension is expected to save a typical household around £160.
At present, businesses enjoy the benefits of a similar program, the Energy Bills Relief Scheme, which offers non-domestic energy users significant discounts on their energy bills.
Regrettably, the relief scheme will conclude as scheduled in April. From then, businesses will only be able to access the more modest Energy Bills Discount Scheme, which runs for 12 months.
The discount scheme provides much smaller discounts on gas and electricity unit prices.
According to government examples, a pub consuming 16MWh of gas and 4MWh of electricity each month might receive up to £2,280 in taxpayer-funded support for the 23/24 financial year.
A small retail shop, meanwhile, might expect to receive £403 of taxpayer support in the same period.
Although energy prices are currently at historic highs, they’re expected to drop starting from the end of June. The government states that the Energy Price Guarantee scheme will help households “bridge the gap” to lower summer prices.
Before the budget announcement, the Federation of Small Businesses (FSB) cautioned that hundreds of thousands of small firms could face downsizing, restructuring, or closure unless energy bill assistance is extended.
The FSB anticipates that firms locked into fixed tariffs when prices were high will be the hardest hit.
FSB National Chair Martin McTague said: “The upcoming spring budget needs to look out for small firms who agreed fixed tariffs in the last year when prices were high, who will soon see their bills go up by as much as four-fold when the Energy Bill Relief Scheme closes at the end of this month.
“We estimate over 350,000, or 28 per cent of small businesses who signed fixed tariffs last year, could need to shrink, restructure or close if their bills revert to the higher rates in April.”
Umbrella Insolvency’s Licensed Insolvency Practitioner, Tom Fox, said, “We’re speaking to numerous businesses concerned about staying open for the next 12 months. Although energy prices are beginning to fall, this won’t help those who committed to long-term contracts when prices were sky-high. Additionally, businesses are grappling with other challenges such as rising inflation, labour shortages, and an impending corporation tax hike confirmed in the Chancellor’s budget.”
For more information on insolvency services for small businesses, contact the team today at 0800 611 8888.