Energy Crisis: What help for Businesses?
It seems no sooner have businesses recovered (at least in part) from the financial impact of covid-19, that another major challenge arrives – this time, the energy crisis.
The Russian war on Ukraine has been the trigger for a significant and sharp rise in global energy prices. Everyone is affected – individuals, businesses and organisations. Boris Johnson’s government, distracted by the Conservative leadership contest, resisted making any announcements of assistance either to consumers, businesses and charities – in spite of warnings that many businesses faced not surviving the coming winter.
Two days after being appointed the new Prime Minister, Liz Truss unveiled initial plans to offer assistance with energy costs, to be funded through borrowing rather than a windfall tax on energy companies. The focus was heavily on help for the consumer, but businesses will also benefit – though to what extent was, at the time of writing, unclear. Plans to flesh out her plans were delayed while the nation and its politicians where in a period of national mourning.
Unlike consumers, businesses have not had the benefit of an energy price cap; many have reporting projected increases in energy costs of more than 500%. There are energy-intensive companies who reportedly might have to reduce operating hours or ration their energy use.
So far, the plans include:
· No rise in corporate tax as previously planned
· An energy price guarantee limiting bills for six months for businesses and public sector organisations (households will get two years’ worth of help at £2,500 per year for the average bill)
· The price guarantee for businesses will be effective from October and will be backdated if necessary. However, businesses should expect several weeks’ delay in accessing the financial support.
· After the six-month period, the government has said it will provide ongoing, focused support for vulnerable industries. Details are awaited.
Further announcements of the six-month scheme for the commercial and charities sectors are expected imminently.
Immediate help
Ahead of further announcements, a reminder of what help is already available for businesses may be useful; and may also serve as a welcome prompt to consider becoming more energy efficient. For example, small low energy businesses and, at the other end of the scale, businesses that use significant amounts of energy, may well be entitled to claim reliefs or exemptions. Note that in August, the government said it was considering introducing further relief for energy intensive industries, such as steel, ceramics and cement.
Businesses may also consider looking at support schemes offered by energy suppliers that can provide financial help for improvements. There are also government business energy schemes, loans and grants available particularly for small business; and some local authorities provide energy efficiency funding.
The devil will be in the detail, once made clearer by government. In the meantime, all options should be investigated to ensure businesses are in the best position to weather the unprecedented energy crisis.
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