Britain’s biggest business group has urged ministers to quickly decide which industries will receive energy support from next spring as hundreds of companies brace for their bills to more than double.
The Confederation of British Industry called on the government to urgently set out details of how it plans to extend the energy bill relief scheme for firms with large bills beyond March 2023. The scheme, which discounts the wholesale cost of energy for all companies, charities and public sector organisations, was introduced in October to replicate the support offered to households in cushioning the shock from rapidly rising energy bills.
The government has said further support will be provided beyond that date for firms in certain industries but has not yet said which. Businesses had been expecting clarity before Christmas as they draft financial plans for 2023.
Energy intensive industries such as steel, chemicals, fertiliser and glass manufacturers are widely expected to be included. However, the CBI called on the government to go further, including businesses such as food and drink manufacturers and carmakers.
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The lobby group said a survey of nearly 700 firms found that companies expect their bills to more than double from April without intervention.
Matthew Fell, the CBI’s chief policy director, said: “The high cost of energy is dominating the decisions that businesses are making each and every day.
“There are no easy answers in all this, but the government will have to keep supporting the most vulnerable firms to help them stay competitive, to build resilience and in some cases to avoid collapse.”
Fell said the CBI supported the decision to target the scheme from April to limit costs but said “businesses need to know before the year is out if they qualify or not”.
“We must also take heed of the lessons from the pandemic, where providing additional cashflow support, especially to [small to medium-size enterprises], was critical to seeing businesses through this period,” Fell added.
The CBI wants businesses to be able to defer their energy bills if needed and be provided grant funding through local authorities to reduce the damage of a predicted recession.
Some companies have said they will have to reduce staff, cut back on capital investment and pass on increased energy costs to their customers if bills rise sharply in April.
The Federation of Small Businesses said nearly half of all small firms expect to further raise prices in response to the crisis if support ends in April and more than a third have already frozen growth plans due to soaring energy costs.
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A sharp rise in the wholesale price of gas after Russia’s invasion of Ukraine has sent bills soaring. Prices are expected to stay high next year as European countries compete for gas to replace Russian supplies.
Avara Foods, one of the UK’s largest suppliers of chicken and turkey to supermarkets and restaurants, said: “Energy costs are hard to predict for next year, but clearly are expected to grow significantly.
“While we’re making good progress in our plans to be more energy efficient, we are a heavy energy user throughout our process and as we are producing fresh food that has to be kept chilled we cannot ‘just switch it off’.
“Businesses like ours, who don’t have the choice to switch off energy usage, should see the price cap maintained to ensure food security for the UK and ensure British families are fed.”
Industry bosses said this week that pubs and breweries across the UK will be forced to shut their doors for good as they face rocketing losses without further energy support.
Andy Wood, chief executive of brewer Adnams, which is hosting regular free meet-ups for people who want to keep warm in its pubs, told the BBC: “We would urge the government to think about the extended energy relief bill which is going through parliament and business rates just recognising the role that hospitality and pubs play in their local communities.”
