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Business energy support to reduce from March government announces

Published:  11 January, 2023

The goverment has announced a new energy support for businesses that will take effect from 1 April 2023, although at a lower rate than the present scheme. 

The Energy Bill Relief Scheme (EBRS), which was announced 1 October 2022, funds a discount on gas and electricity bills for non-domestic customers. 

Under the current scheme, the Treasury covers the difference between wholesale prices and a ‘government-supported price’ of £211 per megawatt hour for electricity and £75 per megawatt hour for gas. 

However, on Monday (9 January) the exchequer secretary to the Treasury, James Cartlidge, made a statement on the provision of non-domestic energy support, confirming that the current level of support would be reduced from 1 April 2023.

Instead, the government will provide relief through a new transitional scheme called the Energy Bill Discount Scheme (EBDS).

From April onwards, the scheme will offer a discount on the wholesale price rather than the unit cost of gas and electricity. Under the new plan, eligible businesses will receive a discount of £6.97 per megawatt hour on gas and £19.61 per megawatt hour on electricity. Speaking to the House of Commons, Cartlidge said this will save a pub roughly £2,300.

The scheme was always likely to be scaled back, and, according to the government, wholesale gas prices have now fallen to levels just before Vladimir Putin’s invasion of Ukraine and have almost halved since the current scheme was announced.

However, some businesses have expressed disappointment at the new package.

Jason Birks, national president of the Federation of Independent Retailers said: “This is hugely disappointing for many independent retailers who are struggling to survive. With rising energy bills, falling margins, and rising payroll costs, small businesses will continue to struggle or, indeed, cease to exist unless additional financial support is available.”

Meanwhile Kate Nicholls, UKHospitailty CEO said: “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.”

Colin Wilkinson, SLTA managing director, added: “Many businesses in the hospitality sector in Scotland have had a bitterly disappointing December – normally one of the year’s key trading periods for the sector – as a direct result of the economic crisis, train strikes, poor late-night public transport and lack of taxi provision in some towns and cities. We’re into the second week of January and these challenges remain.

“So, to hear that the current energy scheme is to be replaced with one that offers a discount on wholesale prices rather than a fixed cap price means that businesses will receive a vastly reduced level of support – understandably, we have very serious concerns about the impact this will have on the hospitality sector.”

Further details on eligibility can be found on the government’s website, here.