UK companies call for more details over energy support cliff-edge

Ministers have been urged to extend help for UK businesses struggling with soaring energy costs beyond the six month cliff-edge set out under the terms of the government’s £150bn support package on Wednesday.

Companies said the energy subsidies would remove the threat of skyrocketing bills in October, when many were facing contract renewals.

But bosses added that the lack of clarity about what would happen beyond six months risked hitting business investment. Support for households, by contrast, runs for two years.

Ministers have said they will review which sectors are most vulnerable before deciding on additional help.

Companies welcomed the promise of state support, which will cap wholesale energy prices at more than half this winter. But many said bills would remain much higher than last year, owing to the surge in prices following the Ukraine war.

Neil Clifton, managing director of Midlands-based group Cube Precision Engineering, which makes products for the automotive and aerospace sectors, said his energy bills had been due to rise from £12,000 in August 2021 to £44,000 this year.

He said state support would limit them to between £23,000 and £25,000, which he called “not ideal, but something we can manage”.

Clifton questioned when his energy supplier would inform him of the new prices and at what level they would be set, given the extra costs that could be added to bills, including the standing charge.

Craig Beaumont, chief of external affairs at the Federation of Small Businesses, said small businesses would not know how much their bills would rise until their supplier contacted them.

He also raised concerns about future increases in standing charges, and questioned why there was no help for groups that signed new contracts in February and March.

Nimisha Raja, founder of Nim’s Fruit Crisps, a snack manufacturer based in Sittingbourne, Kent, said the package “doesn’t help us at all” because the government “has done nothing to address” her £14 a day standing charge.

Lionel Benjamin, co-founder of AGO Hotels, said the package would “only mask the problem for a short while” and that “more will need to be done longer-term to stop businesses collapsing”. He added that energy now accounted for almost a third of his group’s operating costs, up from 8-12 per cent before its latest contract renewal.

Liz Truss, the prime minister, on Tuesday said extra help would be available for pubs after six months but gave no further detail on which other sectors might benefit from a new support package.

Sacha Lord, night-time economy adviser for Greater Manchester, welcomed that pledge but said “businesses will still be paying more than they’re used to” and that “the real concern is whether they can afford to continue trading”.

Jason Black, director of Cornish Inns, a pub company with four sites across Cornwall, said he had been facing a more than twofold increase in his electricity bill to £450 per MWh when the contract for his largest venue was renewed in October.

That bill will now be halved, while costs across Black’s three other sites will fall about 15 per cent.

He praised the government for doing “the right thing” but said it should offer “more targeted help for pubs and restaurants, as we don’t know what [the consumer downturn] will do to people heading out”.

The package also covers organisations including charities and schools. Kevin Courtney, joint general secretary of the National Education Union, said that although the measures “provide a ceiling on funding pain . . . schools are still paying vastly more for their energy than was expected a year ago, with harmful consequences for education”.