New measures to help businesses with their energy bills will help many north-east firms to “keep their heads above water”.
That was the verdict of Aberdeen and Grampian Chamber of Commerce (AGCC) chief executive Russell Borthwick after the UK Government announced a package of support this morning.
Chancellor Kwasi Kwarteng said the government would pick up nearly half of firms’ soaring energy bills to help keep them afloat this winter.
Wholesale costs slashed
The wholesale cost of gas and electricity will be slashed for companies, public services and charities under a scheme which will run for six months starting in October.
The “supported wholesale price” is expected to be £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas.
This is around half the expected wholesale price on the open market, and equivalent to the cap on household energy bills that will be set this October and run for two years.
Short-term relief
AGCC chief executive Russell Borthwick said: “As we enter the winter months, businesses will welcome this short-term relief on energy bills.
“This measure will allow many firms to keep their heads above the water, at least for now.”
But he warned: “The lack of clarity beyond the next six months will leave many businesses facing a deeply uncertain future.
“Households have been given the assurance of a two-year energy price cap – and the same certainty should be extended to commercial customers.
“More broadly, a triple threat crisis of rising energy costs, soaring inflation and the aftermath of the pandemic continues to cripple businesses.
“We hope to see much more action from the government, to reduce the burden of costs on business and help grow our economy, when the chancellor delivers his mini-budget on Friday.”
Many firms ‘on the brink’
Scottish Chambers of Commerce chief executive Liz Cameron said: “Scottish businesses have faced unsustainable energy bills for most of this year, which has already forced some out of business altogether, with many more on the brink.
“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.”
Federation of Small Businesses (FSB) Scotland policy chairman Andrew McRae welcomed the “tangible support” for Scotland’s small firms, adding: “It cannot come a moment too soon.
“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.”
Heating oil pledge
Mr McRae also welcomed a promise of “equivalent support” for those using heating oil.
But on the wider package he said there were still questions about what happens after six months.
He added: “We can’t have businesses simply falling over a cliff in the spring if this relief is withdrawn.”
FSB north-east business development manager Mike Duncan said: “We asked for clarity on the support business owners will receive to help with the spiralling costs of energy, and that is what we’ve got, at least for the next six months.
“As we see the night’s drawing in, every business in the north-east is thinking about how to keep the lights on over winter. For some, at least, planning ahead will now be a bit easier.”
Our new scheme will keep their energy bills down from October, providing certainty and peace of mind.”
– Prime Minister Liz Truss.
The FSB has called on the government and energy suppliers to introduce a discretionary funding pot, similar to the £150 million created for those households who don’t pay council tax, “for all businesses that fall outside the scope of today’s support”.
Prime Minister Liz Truss said: “As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.”
Chancellor Kwasi Kwarteng said the government had acted to ‘stop businesses collapsing”, while also protecting jobs and limiting inflation.
The support a business receives will depend on what kind of contract it has with its energy supplier.
Those which signed fixed-price energy deals on or before April 1 this year will see the wholesale part of their bill capped automatically. Those which entered new fixed-price contracts after October 1 will get the same support.
Companies on default, deemed or variable tariffs will be given a per-unit discount, but the amount of support they can get is limited.
If the price on wholesale gas and electricity markets keeps soaring, their bills will go beyond those on fixed-price deals.
The support package includes plans for a review period halfway through. The government will try to decide how to continue supporting the most vulnerable businesses after the scheme ends.
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