A decision concerning the extension of help for businesses facing soaring energy costs has been delayed until the new year, the Treasury has said.
The Chancellor had been expected to provide more details about the future of business energy support this week, but instead, UK businesses were met with the announcement of a delay, leaving many firms angered and lacking clarity.
Further uncertainty during the festive period
On Monday, the British Chambers of Commerce (BCC) urged the government to make an announcement before Christmas, saying many of its members would struggle to pay their energy bills once the scheme ends in the spring.
“Just over a month ago, the Chancellor promised businesses that they would receive a plan on the future of the energy support package before the end of the year. With 24 hours left until Parliament rises, businesses have one simple question: where is this plan? ” said BCC’s general director Shevaun Haviland.
News of a delay has fueled further confusion and worry for UK businesses during the festive period, with many taking to Twitter to express their disappointment.
Kate Nicholls, boss of UK Hospitality, tweeted:
“Disappointing news that government has also postponed announcement on future energy support until the New Year rather than before Christmas as previously announced,”
“Businesses are facing daily changing rates and contract decisions in Jan so certainty was really needed.”
What support is currently in place?
Following increased pressure that businesses would be forced to close down without support, the Government launched the Energy Bill Relief Scheme for businesses and other non-domestic customers earlier this year, offering a lifeline to small businesses.
As of 1 October, the scheme has helped limit the cost of gas and electricity bills for firms in the UK, but is due to expire on 20 March next year.
What happens now?
On Monday, the Treasury said its final decision would now be announced at the start of 2023, with a spokesperson stating:
“We are protecting businesses from high energy costs this winter, caused by Putin’s invasion of Ukraine, through the six-month £18bn Energy Bill Relief Scheme.
“However, this is very expensive, and we need to ensure longer-term affordability and value for money for the taxpayer.
“That is why we are currently carrying out a review with the aim of reducing the public finances’ exposure to volatile international energy prices from April 2023. We will announce the outcome of this review in the New Year to ensure businesses have sufficient certainty about future support before the current scheme ends in March 2023.”
What can we expect next?
There are a handful of options that could be considered for implementation in the new year, but some possibilities are more complex than others, says Chancellor Jeremy Hunt:
“These are complex matters, it is complex enough to put in place household support. Non-domestic support is particularly complicated because of the huge range of businesses involved.”
A continuation of the current scheme, covering all sectors at the same level, would seem the simplest option, but also the most expensive.
In his autumn statement, the Chancellor prolonged the energy price guarantee for a year from April, at a less generous level (typical annual bills will rise from £2,500 to £3,000). This could be something we see replicated for businesses.
But for now, the wait continues into 2023.
What do you think?
Has your business been impacted by rising energy costs? Is the current government doing enough to prevent small businesses from closing down? And what would you like to see in Jeremy Hunt’s next announcement?
We’d love to hear from you! Leave a comment with your thoughts below.
Thanks for reading
We hope you found this article useful. For more updates like this, visit our blog page.