UK government releases new energy saving advert
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A new energy scheme for businesses, charities, and the public sector was confirmed on Monday (January 9), ahead of the current scheme ending in March. The new scheme will mean all eligible UK businesses and other non-domestic energy users will receive a discount on high energy bills until March 31, 2024. However, the support to be offered is substantially lower than what it has been previously, which some experts warn could “spell the end of the road” for some businesses.
Responding to news of the new energy bill discount scheme, Jack Arthur, energy expert at Uswitch for Business, said: “While the Chancellor’s 12-month Energy Bill Discount Scheme should finally provide clarity for the business community, the impact of a considerably reduced support package from April could be concerning, particularly for smaller businesses.
“Extended support is welcome news, but the new package is a significant reduction in support from the previous £18.4billion.”
The new package aims to strike a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5billion instead.
This means from April 1, 2023, to March 31, 2024, eligible non-domestic customers who have a contract with a licensed energy supplier will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill, except for those benefitting from lower energy prices.
This is while a substantially higher level of support is due to be provided to businesses in sectors identified as being the most energy and trade-intensive – predominately manufacturing industries and sectors such as steel, glass, and ceramics.
According to the Treasury, the latest data shows wholesale gas prices have now fallen to levels just before Vladimir Putin’s invasion of Ukraine and have almost halved since the current scheme was announced, which answers for the ability to lower the value of the support package.
However, Mark Grant of Gloucester-based business finance broker, The Business Finance Branch, commented: “For many businesses, the removal of the energy price cap will spell the end of the road. For those that are able to survive it, the fact that the replacement scheme is tied to wholesale prices will introduce a phenomenal amount of uncertainty and hamper any financial planning.”
Mr Grant continued: “Investment and recruitment will be affected for those with expansion or growth plans as they cannot forecast their outgoings. 75 percent of conversations with our clients currently are to help with working capital and keep cash flowing.
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“Monday’s announcement will only make things worse. This is yet another hammer blow for UK businesses when they are already down.”
According to GetApp, which surveyed UK SME owners, executive managers, and senior managers to examine how the energy crisis is affecting SMEs nationally, it found a staggering 74 percent report a drop in profits due to higher electricity prices.
The research found 11 percent of UK businesses are at serious risk of shutting down due to the increase in prices; Scottish businesses stand at 14 percent, the highest percentage of all countries, while 71 percent of Scottish SMEs are facing the prospect of closing now or soon if prices continue to rise.
Up to 50 percent of UK businesses surveyed that have been impacted by the increase in costs have either received Government aid or are still waiting to receive it. However, 20 percent of UK SMEs believe the aid is still insufficient to propel their companies through the winter and beyond.
Mary Maguire, managing director of Astute Recruitment, said: “The end of the energy cap scheme will seriously impact businesses and charities alike. For many businesses and charities, fiscal prudence at the current time will prove catastrophic.”
To help these charities and all affected businesses, Miss Maguire said it could be better to have a fixed price for energy for a fixed time.
She explained: “The Government could call it the ‘Triple-Fix’ supporting businesses, charities and people. Without this support, many organisations will be like wind turbines with no wind, generating nothing.”
Mr Arthur said: “Businesses who are struggling with their energy bills should be aware of their contract end date and review the terms of any new deal before signing. If they have concerns that they aren’t getting the right level of discount or support, they should speak with their supplier.
“Firms should also be looking at how they can make their operations more energy efficient to mitigate against price rises as much as possible.”
Mike Elliff, CEO of Tyl by NatWest suggested starting with small and simple steps, such as switching to automated and LED lighting from traditional incandescent bulbs and switching off equipment when not in use. He said it can conserve energy and deliver cost savings of up to 80 percent.
Mr Elliff told Express.co.uk: “Completing regular energy audits and using a smart meter to review energy usage can help small businesses identify spikes in energy use. NatWest’s Carbon Planner is a useful tool available to help inform energy-saving decisions.
“In order to fund these changes, small businesses could also consider taking out a green loan, which allows businesses to transition to sustainable practices, and reduce costs in the long run too.”
He also suggested businesses look into effectively using analytics to understand and manage business costs better.
Mr Elliff said: “Business analytics gives owners a clear overview of their sales, payments, and inventory, keeping track of everything in one place and at the same time.”
Professional dashboards, such as the Tyl Portal, can crunch the numbers automatically, saving time and giving useful insights like when the busiest times are.
Mr Elliff said: “This means you can stagger opening hours or employee shifts based on demand to reduce energy usage.”
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