THE UK Government’s business energy support plan does not “live up to the hype” and is not enough to help struggling firms through the winter, Scotland’s hospitality sector has warned.
Ministers have outlined plans to introduce a cap on wholesale energy bills for companies and public sector organisations, such as schools and hospitals, which will roughly match the scheme for domestic customers.
However unlike the two-year household support scheme, businesses will only be helped for six months from the start of October – followed by a review for “vulnerable businesses”.
Business leaders have called for more certainty to be provided over what will happen after this time and for Chancellor Kwasi Kwarteng to offer more help in his “mini-budget” on Friday.
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The SLTA (Scottish Licensed Trade Association), welcomed the Energy Bill Relief Scheme, but warned it “goes no way near enough”.
Colin Wilkinson, managing director of SLTA, said: “This is news that we have been waiting for and obviously we welcome it, but when you look beyond the headlines it doesn’t live up to the hype as this new scheme caps the wholesale price and pubs and bars could still be paying 200-300% higher bills than normal.
“There are pubs and bars currently on a rate of 90p per kWh, in comparison to 15p in normal times. The Government says that the current wholesale price of gas is about 42p per unit therefore businesses should see a reduction of 21p in their unit price but this still means much higher bills than before the energy crisis.”
He added: “The SLTA is concerned this may not be the lifeline we were all hoping for and today’s announcement is not enough.
“More needs to be done to help the struggling hospitality sector through the winter months.”
Liz Cameron, chief executive of the Scottish Chambers of Commerce, said it was welcome that the UK Government has “finally responded” to help with unsustainable energy bills which had already forced some firms to close and left “many more” on the brink.
She said: “Today’s support will come as a significant relief for those latter firms, who were facing imminent closure without support, ahead of winter where energy cost and demand will be at their highest.
“However, for those firms that will benefit, the six-month cap is not enough for them to be sufficiently reassured that the problem won’t return when the cap is no longer in effect.
“We are concerned that even more sudden rises in energy bills will await firms once the cap is lifted.”
Andrew McRae, Scotland policy chair for the Federation of Small Businesses (FSB), said: “For those who were facing four or fivefold increases in their bills, a reduction on the cost per unit will provide some welcome relief and allow them to plan their way through surviving the winter.
“At the same time, we’re concerned that there is no mention of a cap on rises to standing charges.
“We’ll need to watch that closely so today’s move leads to a genuine, significant reduction in bills.”
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He added: “There are questions about what happens when the six months run out.
“We can’t have businesses simply falling over a cliff in the spring if this relief is withdrawn.
“Neither can we have businesses who had no choice but to sign up to expensive deals before April left out in the cold. That’s why we are calling for a hardship fund to be created for those who fall outside of the current support, or for whom the current support will be insufficient.”
Dr Jamie Stewart, deputy director of the University of Strathclyde’s Centre for Energy Policy, said the plan would offer some reassurance for business, charities and public sector organisations and reduce the immediate risk of firms collapsing and job losses.
However he added: “Businesses, as well as other organisations, require more long-term certainty so they can plan and manage their costs and operations effectively, sustain jobs and competitiveness, and ultimately contribute to the UK Government’s commitment to achieving economic growth.
“In order to do this, further efforts must be focused on securing sustainable and affordable energy supplies, including reviewing how the energy market is regulated and how prices are set.
“Without this, extremely high energy prices could continue to fuel inflation and drive cost-of-living pressures, which risk damaging the long-term sustainability of the economy.”
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