Businesses have been handed a welcome boost from the Government after months of worry in the face of rising energy bills amid fears that some would have to close this winter. As with domestic bill payers, businesses will now benefit from a price cap on the tariffs from October 1 after intervention from central government.
Business leaders in the West Midlands said employers would be "breathing a sigh of relief" following the announcement from new Prime Minister Liz Truss' cabinet. The Government said the price cap would cut the expected wholesale price in half.
For months, both businesses and industry groups have been warning of a winter of crisis as huge increases in energy cost are pushing companies to the brink. Support for households was announced a fortnight ago but businesses have had to wait for more details.
The new Energy Bill Relief Scheme provides a discount on wholesale costs for all non-domestic customers. A supported wholesale price - expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter - has been set in order to cut bills.
The Government said the scheme would apply to fixed contracts agreed on or after April 1 this year, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from October 1 to March 31 and the savings will be first seen in October bills which are typically received in November.
Prime Minister Liz Truss said shops and pubs would benefit from support with their energy bills beyond the initial six-month term. Chancellor Kwasi Kwarteng is set to give more details of the Government's support for businesses in his mini-Budget on Friday.
He said: "We have stepped in to stop businesses collapsing, protect jobs and limit inflation. And with our plans to boost home-grown energy supply, we will bring security to the sector, growth to the economy and secure a better deal for consumers."
The news of the price cap has been broadly welcomed by business leaders in the West Midlands.
Raj Kandola, head of policy at Greater Birmingham Chambers of Commerce, said: "Businesses will breathe a sigh of relief - it's a significant intervention from the Government to minimise the impact of soaring energy prices. Details around the scheme, particularly in relation to the defined unit price for gas and electricity are also welcome - now businesses can plan ahead in the run up to Christmas with a degree of confidence.
"In the coming days, we hope the Government will provide further information on the definition of a vulnerable business and outline a scheme of support for those that will unfortunately fall outside the parameters of the scheme but will still need help in the months ahead. However, we can't view energy prices in isolation.
"Right now firms are facing a perfect storm of recruitment challenges, rising material costs and supply chain bottlenecks. It's imperative the Chancellor uses Friday's fiscal event to extend VAT relief for hospitality and non-essential retailers, pass meaningful reform of the business rates system and review and reform the Shortage Occupation List to help free up much needed cash for firms suffering from crippling overheads."
Neil Clifton, managing director of Cube Precision Engineering in Rowley Regis, welcomed the Government's support package, saying that, without intervention, his company's energy bills were due to rise from £12,000 a year ago to a massive £44,000.
"On top of lots of external pressures, inflation and supply chain disruption, this would have been the last thing we needed, especially as we are trying to make the most of lots of exciting new opportunities," he said.
"Our bill will now be between £23,000 to £25,000 based on it being capped at £0.21p per kWh - not ideal but something we can manage. I'm also looking forward to getting full details on the support and to see if levies are to be applied on top of the introduction of the capped rate."
Corin Crane, chief executive of Coventry and Warwickshire Chamber of Commerce, said: "Businesses with a strong order book are being tipped into losses as their energy bills go up and as a result are considering whether they are viable anymore so we are pleased the new government is taking the issue seriously and we welcome this latest announcement.
"This intervention will help many businesses over the difficult winter period and we will be campaigning hard to make sure that this support package is extended beyond six months and until global prices have stabilised. What this crisis has highlighted, though, is the fragile nature of the UK energy supply and our dependence on unsustainable fossil fuels.
“We can't take our eyes off the Net Zero agenda and this short-term intervention needs to be backed up quickly with an ambitious and innovative package of sustainable options. We need huge investment in wind and solar generation at a national level and wherever possible we need to use UK suppliers to build and install this technology.
"We need financial support and planning flexibility for UK businesses to invest in onsite generation for their own supply and to enable them to put surplus green energy back into the system.
"Most importantly, in the West Midlands, we need proper devolved powers and budgets to deal with many of these issues ourselves including grants to support businesses with energy efficiency programmes, powers to reclassify West Midlands manufacturers from energy network levies, and a huge acceleration in the move to battery and hydrogen powered transport networks."
