The UK Government must do more to support businesses in Wales facing ever-increasing energy costs, Economy Minister Vaughan Gething has said.
Earlier today, the Minister chaired a meeting of energy supply companies and representatives of Welsh business – the CBI, FSB and Chambers Wales – to discuss the impact high energy prices are having, what energy supply companies are doing to assist, and what can be done to facilitate closer working and further support.
While Welsh Ministers welcome the UK Government’s decisions to extend the duration of its support for domestic and non-domestic energy users beyond March 2023, and to continue including the public and third sectors in the non-domestic schemes, recognising the vital services these sectors deliver, there is there is widespread concern the level of support provided to businesses is insufficient.
The UK Government’s Energy Bills Relief Scheme (EBRS) operated from 1 October 2022 to 31 March 2023 and capped the unit prices of wholesale gas and electricity for non-domestic customers. Following a review of the EBRS by HM Treasury, the EBRS was replaced by the Energy Bills Discount Scheme (EBDS), which runs from 1 April 2023 to 31 March 2024.
The support being provided though the EBDS is significantly lower than that provided under the EBRS, and to similar support schemes in other countries.
Under the EBDS, a medium-sized manufacturer using 1,600 MWh of gas and 200 MWh of electricity each month would pay £215,000 per month in energy costs. The UK Government’s own modelling shows that under the new EBRS, the same manufacturer could pay over three times that amount.
Speaking following the meeting, the Minister said dealing with the causes and consequences of high energy costs “are two the most pressing areas facing us.”
Economy Minister, Vaughan Gething said:
“The message from Welsh businesses is very clear – high energy costs are having a devastating impact.
“High energy costs have been a long-standing problem for businesses. We share their concern that the maximum discount is set at a level that will not be sufficient if prices spike, and will further harm their competitiveness and, in many cases, their viability.
“I’m calling again on the UK Government to bring forward an additional package of measures that will help Welsh businesses, third and public sectors through this incredibly difficult period, tackle the long-standing issue of high energy prices in the UK and support the transition to Net Zero.”
Paul Butterworth, Interim CEO of Chambers Wales South East, South West and Mid, said:
“As of 1 April, support for businesses’ energy bills dropped by 85% as the Energy Bill Relief Scheme (EBRS) came to an end.
“It has now been replaced by the Energy Bill Discount Scheme (EBDS) which will provide, on average, £400 per year, for SMEs while their energy bills are in the thousands per month. Larger energy intensive firms, such as Welsh manufacturers, receive less of a reduction.
“While wholesale prices are reducing, businesses are not yet seeing that reduction. Therefore, the drop-off in support is a blanket rise in energy prices for sectors who do not meet the classification of energy intensive industries, like hospitality.
“The British Chambers of Commerce (BCC) stated that 47% of UK businesses would find paying their energy bills difficult from 1 April. That represents over 125,000 businesses in Wales alone who will struggle.
“Chambers Wales South East, South West and Mid are joining the BCC in calling for an increase in Ofgem’s powers to help better regulate the energy market for businesses.
“With inflation rising again, the end of the super deduction and potential changes to business rates, firms cannot be expected to take on additional costs without significant risks.”
The Welsh Government is using its levers and with the Development Bank of Wales’ has recently launched a new £10m Green Loan Scheme, which offers discounted interest rates and flexible repayment dates for loans for investments in:
- Renewable energy technology, including that located on or adjacent to business premises;
- Improving the fabric of premises and energy efficiencies within buildings (heating, lighting, IT etc);
- Upgrading systems or machinery to reduce energy use; and
- Water usage and waste reduction/improvements
