Trade associations have given a guarded welcome to Prime Minister Liz Truss’s announcement that businesses, as well as households, will be covered by a new Energy Price Guarantee, while awaiting full details of the level of support to be provided.
The Guarantee, which replaces the price cap, is intended to ensure that a typical UK household pays an average of no more than £2,500 per year on energy for the next two years, starting from October 1. At the same time, the Prime Minister said that business users would be offered “equivalent” support for a period of six months.
After this initial six-month scheme, the government will provide “ongoing focused support for vulnerable industries” and review the programme after three months. Further details will be published “shortly”, the government said. Energy suppliers will be fully compensated, the government has confirmed.
The British Independent Retailers’ Association (Bira) welcomed the intervention on behalf of businesses, but added that the measures don’t go far enough to reduce concerns for retailers.
Bira’s chief executive Andrew Goodacre said: “We welcome the government intervention announced today. Retailers on every high street will welcome any support, but we still have concerns.
“Making the energy rate for businesses the same as consumers still imposes a 300% increase on energy bills for many businesses, and that will still cause hardship for those business owners. We also believe that any review over the next six months should have a broader remit of looking at all business costs. There is limited prospect of prices reducing in six months time, and so we cannot afford to see business rates increase in line with inflation just as this business support comes to an end.”
Small firms will be reassured by the Prime Minister’s announcement, but will need detail in order to plan for winter, said National Chair of the Federation of Small Businesses (FSB) Martin McTague.
He commented: “It’s a huge relief for millions of small businesses to hear confirmation they will be part of the Government’s plans to help on energy, and we now have a high-level commitment in principle to help businesses get through the winter intact.
“However, the announcement is very high-level and sparse on detail so we will be working with the new Government to clarify what happens next.”
According to the FSB, the government statement “leaves a number of questions unanswered”.
These include the new fixed unit prices and standing charges from October 1; whether energy retailers will suspend high quotes and contract offers and recalculate them; and whether those who have accepted hugely increased bills in recent weeks be able to renegotiate them.
A further complication is the proposed six-month period of support, as most energy contracts are quoted for periods of 12 months and above.
McTague said: “This must not result in a cliff-edge after six months, with the withdrawal of support to all but ‘vulnerable’ targeted industries, sectors or types of business. The definition of who falls in and out of that support will need to be looked at carefully at the three-month review.”
The Ornamental Aquatic Trade Association (OATA) has warned that aquatic shops and wholesalers could be forced to euthanise their livestock if rocketing energy bills make their businesses unviable.
The body had written to outgoing Prime Minister Boris Johnson highlighting the issue, and is urging aquatic businesses to write to their MPs to ask for support.
