The British Chambers of Commerce (BCC) has warned the economy cannot recover and grow while businesses continue to be hit by rising costs as the Government announced a huge 85% cut in energy bill support.
From April this year, the Government will scale back its financial support for businesses facing record energy bills.
Rather than costs being capped as they are currently, under the new scheme, firms will get a discount on wholesale prices – but only when energy costs are high.
Heavy energy-using sectors, like glass, ceramics and steelmakers, will get a larger discount than others.
BCC Director General, Shevaun Haviland, said business could help the UK return to prosperity, but only with the right support: “Despite Government efforts, an 85% drop in the financial envelope of support will fall short for thousands of UK businesses who are seriously struggling.
“Many businesses have been fighting for their survival for months and rising energy costs have fast become the tipping point. While we welcome the 12-month duration of this package, its value is nowhere near enough and means that for some firms, energy will now be a cost too far.
“We understand Government must consider public finances, but any support package, short or long term, should be right for business – otherwise we’re going around in circles. The wrong type of support will continue to see business confidence deplete and Government having to revisit its package.
“This is not about giving a handout to failing firms. It is about investing in British businesses, many of whom are confident about the strength of their order-books despite being hammered by eye-watering energy costs.
“Our economy will not be able to grow if our businesses are in decline.
“Alongside an energy support package, we need an energy support strategy to get businesses on the right track to longer term efficiency.
“There are several options to consider, and we urge the Government to prioritise the following three:
- Increase OFGEM’s powers: Ensure effective competition in the business energy market for non-domestic contracts by extending OFGEM’s regulatory powers to guarantee businesses access competitive fixed rate contracts and energy providers move swiftly to pass on wholesale price reductions
- Energy production: Government to bring forward ambitious plans to enable more renewable and sustainable energy production across the UK
- National energy saving campaign: Government should launch a national campaign with support initiatives for businesses to drive down current consumption through energy efficiency measures, such as green grants and tax incentives
“It is a critical year for the UK economy and with the right focussed support, businesses can help turn the economy around and get the UK back to growth and prosperity.”