Losing energy support could be 'death knell' for some businesses
Shropshire businesses say the uncertainty which has surrounded the government's energy support plans has had a big impact in their long-term planning.
And one West Midlands business leader, Stephen Morley, President of the Confederation of British Metalforming, has said a reduction in support 'could sound the death knell for lots of well-run companies'.
The Government has promised to help businesses with their energy bills for another year, but significantly reduced the amount of support they will get.
Ministers said that non-domestic customers – which include businesses, charities and schools, among others – would get up to £6.97 taken off their energy bills for every megawatt hour (MWh) of gas they use. Electricity bills will also be discounted by up to £19.61 per MWh.
It will deliver billions of pounds of support to companies over the 12 months from the start of April, however it is considerably less generous than the support they currently get.
The current scheme is set to cost the Government about £18 billion over just six months, compared with £5.5 billion over a whole year for the new plan.
It comes as Christopher Greenough, Chief Commercial Officer of SDE Technology in Shrewsbury, said: "Our electric bill has gone up £500,000 each year which, for us, is a big impact on the business."
"The relief we have had to date has been great. We know it has to be reduced because we can't be given money hand over fist forever but it would be nice to see it stepped down and for high energy users it needs to stay in place really.
"There's just been a lot of uncertainty. We just all needed clarity and whatever they were going to do, they needed to tell us so we can plan for the best or the worst. We are prepared to make long term investments for our business but we can only do that if they tell us exactly what we should be doing."
Speaking on behalf of the trade association for UK manufacturers of fasteners, forgings and pressings, cold-rolled and sheet-metal products, Mr Morley added: "The CBM held several meetings with BEIS officials and made representations directly to the Secretary of State for Business, clearly warning about the negative impact of existing support not being enough, never mind the prospect of reducing it from April.
"From the outset we provided clear evidence of the huge increases our members were facing and detailed how much the support scheme would cover.
"In one case, we have a manufacturer who saw energy costs rise from £1m to £4.5 and a turnover that remained relatively flat. How do you even begin to find an answer for that?"
"There has been evidence of several members being ‘coerced’ into new long-term contracts at higher rates at a time when they didn’t know what the future would hold. With wholesale prices now reducing, suppliers will reap the benefit at the expense of our members who are good, traditional manufacturing businesses."
Mark Grant of business finance broker, The Business Finance Branch, said: “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.
"Investment and recruitment will be affected for those with expansion or growth plans as they cannot forecast their outgoings. 75% of conversations with our clients currently are to help with working capital and keep cash flowing. Monday's announcement will only make things worse. This is yet another hammer blow for UK businesses when they are already down.”
Mary Maguire, Managing Director of UK-wide recruiter, Astute Recruitment added: “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."
