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Business: energy plan “a sticking plaster on a bleeding wound”

Author: ICAEW Insights

Published: 21 Sep 2022

The energy discount for businesses has received a mixed response from members and companies, who welcome the support but question whether it’s too little, too late.

Businesses have received the details of the government’s non-domestic energy discount scheme in a warm to tepid way. While many welcome that there is support coming at all, some are questioning the timeframe and timing of the plan, and others are waiting for news of how it will be paid for.

Johnathan Dudley, Midlands & South West Managing Partner and Head of Manufacturing Business, for Crowe UK LLP, is particularly critical of short-term measures and the long-term strategy. He says: “Support for just six months will not stop key strategic decisions being made. It’s a sticking plaster on a bleeding wound. Also, grant aid for green transformation is key to a package to wean users off high usage fossil fuels in the medium term.”

Food and hospitality, as well as manufacturing, are particularly impacted by rising energy costs. Carl Moore, Finance Director for Montezuma’s Chocolates, agrees that the time frame is too long.

“The promise of support is welcome, but six months is too short a timescale to give much comfort, especially when we do not yet know exactly what the support package looks like beyond that period. For a business to have confidence going through the winter, we need to know what will happen after six months, and especially through the following winter.”

Nick Tiley, Founder and Director, Cambridge Financial Direction Ltd was more cautiously optimistic about the plan, however, pending details of the costs to business. “Any help that the government can give businesses to reduce costs from the high current market prices are to be welcomed. We await the anticipated mini-budget to see how the other costs and taxes on businesses are likely to change in the years ahead.”

Small businesses are also a vulnerable group, and Dr Jackie Mulligan, CEO of the ShopAppy local business shopping platform, believes that the announcement has come too late for many small companies.

“The length of time they may need to wait for payments to be backdated will exacerbate the already critical cashflow issues they are facing. While it's good to finally have some support announced, small businesses, particularly those that line our high streets, need to be helped right now. There is no time for delay.”

One set of measures for all businesses misses the fact that certain business types and sectors have been disproportionately impacted by COVID-19 and the cost of living crisis, she says. “Wider reforms that are longer term need to be in place that help level things up. Losing local shops and services has a far bigger impact on communities and the government needs to focus on that, because there are long-term social as well as economic costs.”

Esme Marshwitch, owner of small mosaic and glass retailer The Glassy Witch, based in Alton, Hampshire, backs up Dr Mulligan’s assessment, and isn’t happy about the idea of meeting the costs further down the line. “This isn't a cut at all. The energy firms have been making huge profits already on these prices, so all this is doing is borrowing money at the taxpayer's expense to protect profits that are held privately.”

However, Shirley Leader, Director of Petersfield-based clothing boutique Velvet & Rose, is more enthusiastic about the plan, reflecting the views of those who are just happy to have some support. “The help with energy bills is very much welcome. We did originally hear that this would be for vulnerable businesses so we are hoping it will cover all businesses. We would also welcome capped charges for standing charges as well as unit charges, because after six months we will still be in a vulnerable position if this is not addressed.”

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