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‘Scaling back already-insufficient energy support will hit small businesses’

Tom Shearsmith
11 January 2023

Thousands of small businesses are set to struggle when the “already insufficient” help they are getting with their energy bills is slashed less than three months from now.

Experts also warned that the move might put another dent in the UK’s efforts to meet its environmental goals, as firms are left without enough cash to invest in new technology.

Although business groups welcomed the certainty that the new 12-month support will give them, they questioned the level of support.

Michelle Ovens, Founder of Small Business Britain, said: “Businesses were hoping to receive reassurance that post-March things would become more manageable, but it is hard to see how the latest announcement will do that.

“Small businesses therefore are rightly concerned that the already insufficient energy package is being rolled back significantly in just a couple of months’ time.”

This new support will give businesses with an energy contract discounts on wholesale prices of up to £6.97 per megawatt an hour for electricity and £19.61 per megawatt an hour for gas.

The new support is much less than the current discount because wholesale energy costs have fallen closer to where they were before just before Russia’s invasion of Ukraine and almost halved since the current scheme was announced.

The Government estimates that a typical small retailer will save around £400 off their annual bill.

Energy experts at consultancy Cornwall Insight said the hospitality sector and some retailers could be especially vulnerable to the reduction.

“The thresholds set for support under the EBDS (Energy Bills Discount Scheme) versus the support previously offered mean businesses will have to take a lot more energy price pain before any medicine is administered,” said Cornwall Insight chief executive Gareth Miller.

“As a result, we already see the EBDS being poorly received by some businesses and their trade associations.”

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