Westminster unveils energy support for businesses

NON WEDNESDAY, September 21, the UK Government announced new support for households, businesses and public sector organisations facing rising energy bills in Great Britain and Northern Ireland.
Through a new government Energy Bill Relief Scheme, the government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices.

The support will be equivalent to the Energy Price Guarantee put in place for households.

It will apply to fixed contracts agreed on or after April 1, 2022, and to deemed variable and flexible tariffs and contracts.

The Price Guarantee will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users.

The savings will be first seen in October bills, which are typically received in November.

As with the Energy Price Guarantee for households, customers do not need to take action or apply to the scheme to access the support.

Support (in the form of a p/kWh discount) will automatically be applied to bills.

RISK OF BUSINESSES MISSING OUT

The price reduction level for each business will vary depending on their contract type and circumstances.

Non-domestic customers on existing fixed-price contracts will be eligible for support as long as the contract was agreed on or after April 1, 2022.

Provided that the wholesale element of the price the customer is paying is above the Government Supported Price, per unit energy costs will automatically be reduced by the relevant p/kWh for the duration of the Scheme.

Customers entering new fixed price contracts after October 1 will receive support on the same basis
those on default, deemed, or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the Supported Price and the average expected wholesale price over the period of the Scheme.

Non-domestic customers on default or variable tariffs will therefore pay reduced bills, but these will still change over time and may still be subject to price increases.

The government is working with suppliers to ensure all their customers in England, Scotland and Wales are allowed to switch to a fixed contract/tariff for the duration of the scheme if they wish, underpinned by the government’s Energy Bill Relief Scheme support for businesses on flexible purchase contracts, typically some of the largest energy-using businesses.

The government will provide equivalent support for businesses not connected to the gas or electricity grid. Further detail on this will be announced shortly.

SUPPORT MUST AVOID
THE CLIFF EDGE

The government will publish a review of the scheme’s operation in three months to inform decisions on future support after March 2023.

The review will particularly focus on identifying the most vulnerable non-domestic customers and how the government will continue assisting them with energy costs.

Prime Minister Liz Truss said: “I understand the huge pressure businesses, charities, and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.

“As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.

“At the same time, we are boosting Britain’s homegrown energy supply, so we fix the root cause of the issues we are facing and ensure greater energy security for us all.”

Kate Nicholls, CEO of UKHospitality said: “This intervention is unprecedented, and it is extremely welcome that the government has listened to hospitality businesses facing an uncertain winter. ef
“The government has recognised the vulnerability of hospitality as a sector, and we will continue to work with the government, to ensure that there is no cliff edge when these measures fall away.”

SOME BUSINESSES WILL FALL
BETWEEN THE CRACKS, SAYS FSB

Tina McKenzie, Policy and Advocacy Chair, Federation of Small Businesses (FSB) said: “This announcement will give certainty for the next six months, but a tough year remains ahead of many small firms.

“Many have been waiting for details on the energy bills support package to plan confidently for the winter and beyond, so it’s encouraging to have clarity from the Government on the form that its support will take.

“The next stage will be for small businesses to learn what the changes mean for their current contracts and for any offers they have been looking at.

“Subsidising the unit costs of electricity and gas for six months is welcome, but there are those who miss out from before the six-month period, and help must not result in a cliff-edge afterwards.
“We are calling for a hardship fund to be created for those who fall outside of the current support or for whom the current support will be insufficient.

“There will be hardship for some businesses which signed fixed contracts after prices rose but before April, who find themselves excluded from the scheme.

“FSB calls on energy suppliers to allow those customers to switch without charge to new fixed contracts, covered by the Energy Supported Price if that makes the difference for the small business to survive.

“Small businesses are the definition of vulnerable when it comes to these energy price hikes. Small firms do not have the ability to hedge, or negotiate energy prices, so we will be encouraging Government to continue to help small businesses across all different sectors after the six months have elapsed.”

Ms McKenzie called for common sense and understanding from the energy industry, which will continue to reap massive profits: “Energy companies must play their role to support their small business customers.

“Energy providers must pass on the benefit of the freeze in full and must immediately provide updated bills and quotes to each small business customer who will be wondering today what the changes mean for them.

“We’re concerned that there is no mention of a cap on rises to standing charges, which are the other main element of energy bills. While households’ standing charges will be capped, the same can’t be said for businesses. 

“We call on energy suppliers to support their small business customers by committing to lowering standing charges as far as possible.

“We’d like to see energy companies promise not to disconnect businesses from energy supply that are currently unable to pay for their energy bills this winter and not ask for disproportionate upfront payments.

“Currently, small firms could be disconnected from energy supply if they cannot pay bills after 30 days.
“We will be writing to energy companies in this regard and encourage them to support their small business customers in this difficult period.”

SHORT-TERM FIX FOR
LONG-TERM PROBLEM

Matthew Fell, CBI Chief Policy Director, said: “We welcome the government’s quick and decisive action to provide hard-pressed businesses with a substantial short-term fix to a long-term problem.
“The package will ease worries about otherwise viable businesses shutting up shop, and smaller companies especially will benefit from the discounted rate.

“Businesses will also want to know more about the exit strategy and what happens when the six-month cap runs out. Working closely with businesses will be key to successful implementation.

“The long-run solution is to double-down on energy security and to incentivise firms to push ahead with ambitious energy efficiency programmes to lower demand.”

CHANCELLOR of the Exchequer Kwasi Kwarteng unveiled his and Liz Truss’s economic vision for the UK on Friday morning.

The headlines are straightforward.

There will be £45bn in tax cuts by 2027; however, the largest cuts – national insurance cuts, the abolition of the cap on bonuses and the highest income tax rate- benefit only high earners.

MAIN POLICIES

Cut in the basic rate of income tax to 19% from April 2023;

National Insurance will not rise as scheduled, and the Government will reverse the current year rise as of November 6;

New Health and Social Care Levy to pay for the NHS will not be introduced;

The top rate of income tax was cut from 45% to 40%;

Cancel the rise in corporation tax which was due to increase from 19% to 25% in April 2023;

Rules around universal credit tightened by reducing benefits if people don’t fulfil job search commitments;

VAT-free shopping for overseas visitors;

End of the cap on bankers’ bonuses;

Planned increases in the duties on beer, cider, wine, and spirits cancelled;

Government to discuss setting up investment zones with 38 local areas in England.

Alongside the above, the Chancellor announced plans to remove environmental safeguards for building developments and reduce the regulatory burden on financial institutions.

KWARTENG LEAVES LABOUR AN OPEN GOAL

In an interview with Rishi Sunak during the Conservative leadership contest, Nick Robinson observed that it would be a nasty surprise for the former Chancellor when he found out who’d been in power for the last twelve years.

Kwasi Kwarteng followed Liz Truss’s preferred method of operation: he pretended they hadn’t happened.

The Chancellor comprehensively dumped on the policies pursued over the last dozen years by successive Conservative governments, for a decade of which Liz Truss has been a member.

His statement was, as one ministerial colleague said, “a game changer”, although perhaps not in the way he envisaged.

So complete was the change of economic policy that it leaves an open question about how Mr Kwarteng and his Cabinet colleagues ended up in the same political party as most of their backbench colleagues and served under the last three Conservative leaders.

Shadow Chancellor Rachel Reeves did not miss the open goal. Even as Mr Kwarteng and Ms Truss shook their heads on the government benches, she hammered home that the Chancellor’s statement was an admission the record of Conservative governments since 2010 was one of a failure to deliver growth or a viable economic plan.

THE SUPPLY SIDE FIX

The Chancellor and Prime Minister’s rationale is that cutting taxes for the already well-off will benefit all citizens as they are incentivised to invest and act in entrepreneurial ways. In addition, reducing regulation for businesses will encourage increased commercial enterprise.

They believe the growth stimulated will make up for any loss in tax revenues as increased economic activity, encouraged by lower taxes, leads to increased government revenues.

That approach is called supply-side economics, which focuses on increasing the supply of goods and services through growth.

In every developed nation where the Government’s brand of economics has been tried, two things have happened: a cataclysmic bust has followed a short-term burst of economic activity.

In addition, wealth inequalities – and the UK is already grossly unequal – are embedded and made worse.

Low taxes on the wealthiest do not distinguish between those who generate wealth through their industry or create economic activity through business investment and those who inherit wealth or sit on capital without producing anything.

“THE RICH WILL REJOICE”

Wales’s Finance Minister, Rebecca Evans MS, responded: “Rebecca Evans, Minister for Finance and Local Government, said: “Instead of delivering meaningful, targeted support to those who need help the most, the Chancellor prioritises funding for tax cuts for the rich, unlimited bonuses for bankers, and protecting the profits of big energy companies.

“Instead of increasing funding for public services in line with inflation, we get a Chancellor blithely ignoring stretched budgets as public services find their money is not going as far as it did before.”

Plaid Regional MS Cefin Campbell said: “This Budget will see the rich rejoice as their bonuses rocket and their tax bill sliced, once again it will be the poorest and most vulnerable bearing the brunt of the disastrous cost of living crisis.”

 Plaid Cymru’s Treasury spokesperson, Ben Lake MP, added: “Tax cuts for the super-rich will do absolutely nothing to drive growth in the Welsh economy.

“I urge the UK Government to recognise that our Government in Wales must be given the fiscal tools to unlock our economic potential ourselves. That is the only way to improve the lives of people across Wales.”

Welsh Conservative Shadow Minister for Finance, Peter Fox MS, said: “Today shows that the UK Conservative Government has a comprehensive plan to provide a sharp boost to the economy by putting cash back into people’s pockets. Labour in Wales has the power to cut taxes in Wales but chooses not to.

“Mark Drakeford needs to take a leaf out of Liz Truss’ book and take immediate action to support hard-working people and struggling businesses, stimulating the Welsh economy rather than stifling it.”

Scott Corfe, Research Director at Social Market Foundation, said: “The Chancellor is taking a very high-risk gamble with the economy.

“If his package of enormous tax cuts and ‘supply side reforms’ fails to translate into significantly higher economic growth, we risk further falls in the pound and surging gilt yields as investors lose confidence in our ability to pay our way in the world.

“That, in turn, means higher inflation, an unsustainable trajectory for the public finances and steeper interest rate rises – potentially deepening rather than alleviating the cost of living crisis.”

DURING The King’s visit to Cardiff on Friday (Sept 16), The Senedd assembled to present a Motion of Condolence to the King.

A Motion of Condolence is a public expression of sympathy that takes place after the death of an important figure.

During an extraordinary session of the Senedd on Sunday, September 11th, MSs agreed the following motion of condolence without a vote:

“That this Senedd expresses its deep sadness at the death of Her Majesty The Queen and offers its sincere condolences to His Majesty The King and other Members of the Royal Family. We recognise Her Majesty’s enduring commitment to public service and duty, including her support for many Welsh charities and organisations, and her lifelong association with Wales and its people.”

The speech was delivered bilingually with this English interpretation provided by the Senedd, along with the images above and below.

The Llywydd of the Senedd, The Right Hon. Elin Jones MS, said, ”

Your Majesties, Senedd Members, Guests.

On behalf of the entire Senedd, I would like to extend a warm welcome to His Majesty the King and Her Majesty the Queen Consort on your first visit to the Senedd since the Queen’s sad passing. We extend our warmest condolences to you and your family.

We welcome your Majesties to our Senedd today and we offer our sincerest condolences on the sad death of your mother, the Queen. We know that so many of the people we represent have been saddened, even shaken, by her loss and hold you and your family in their hearts and prayers at this time.

As we meet here today to offer our motion of condolence, it is poignant for us to think that the Queen’s final visit to Wales was only 11 months ago at the official opening of our sixth Senedd. The Queen was on fine form that day. Many members shared their anecdotes of that visit when we met to pay tribute to the Queen and discussed our motion of condolence in the Senedd on Sunday. And as she left us, eleven months ago, I hope that Her Majesty carried with her the beaming smile of Ffion Gwyther, the last person she met that day in Wales, the young actor from Furnace Llanelli, who smiled broadly as she handed the Queen a posy.

The stories and tributes paid by members to the Queen when we convened on Sunday were warm and witty. As you may imagine, there were many mentions of corgis – her constant, lifelong Welsh companions. Corgi, a Welsh word. Literally small dog. And of course the members here representing Pembrokeshire were particularly keen to champion her preference for the Pembrokeshire corgi. And the member for Ceredigion, me, was silent, and ever so slightly jealous, of the Queen’s choice of the Pembrokeshire corgi over the Cardiganshire corgi.

The Queen was with us for each of the six official openings of this Senedd – and on each occasion, she noted the growth of our powers and the actions that we had taken on behalf of the people of Wales. She respected this Senedd as an expression of the democratic will of the people of Wales.

The Queen was with us in 1999 for the opening of our first fledgling Assembly. She has shared our journey of devolution. She partook in each of our 6 openings, commenting each time on the development of our powers and in becoming a ‘national parliament’ Senedd Cymru. The Queen respected this Parliament because she respected the democratic choices of the people of Wales. She saw us come of age and was interested in our next steps.

From Glyndŵr’s first Senedd of the fifteenth century in Machynlleth to the one in which we are gathered today, our story is old but our democracy is young and ambitious.

It is my sincere hope that the modern relationship between this Senedd, this country and the Royal Family will be rooted in respect and sustained by understanding.

The story of our land, our nation, is a long one, but the story of our Senedd is new and modern. Our eyes are on the future, and I am confident that our co-operation with you, the King, and with the royal family, will reflect that.

And as we remember today the Queen’s enduring commitment to our parliament, we also look forward to the King’s future association with the Senedd and our work on behalf of the people of Wales.

I now invite the First Minister to present the Motion of Condolence to His Majesty the King.

The Motion of Condolences was presented bilingually by the First Minister Mark Drakeford MS, followed by a reply from His Majesty The King in both languages.