Government announces scaling back of energy bill support for businesses – Carmichael responds

Orkney and Shetland MP, Alistair Carmichael, has today responded to the government’s announcement of scaled back energy bill support for businesses from 1 April. The current £18 billion scheme (Energy Bill Relief Scheme) has supported businesses and public sector organisations such as charities by providing a discount on wholesale gas and electricity prices, and will be replaced by a smaller £5.5bn scheme running to 31 March 2024.

Eligible non-domestic consumers will receive a unit discount of up to £6.97/MWh unit discount to their gas bill and a unit discount of up to £19.61MWh to their electricity bill during the 12-month period from April 2023 to March 2024, above a threshold level of £107/MWh for gas and £302/MWh of electricity. As previously, customers will not need to take action or apply to the scheme to access the support. Support will automatically be applied to bills by suppliers.

Wholesale gas prices are now below the level they were before Russia's invasion, but still three to four times higher than their long-term average.

Mr Carmichael said:

“Whatever the government’s reasons for reducing support to businesses and other organisations, I fear that there may be no shortage of unintended consequences for those at the margins. We risk seeing a cliff-edge moment for businesses. The hope may be that by the spring energy shocks will be receding, but it is a big bet that the government is making. Energy prices always rise fast, and fall all-too slowly.

“I would urge business owners and others in the isles who are affected to be aware of the changes in support coming in April, and to contact my office if they are concerned about the impact to their bottom line. The more information we have about how the new scheme will hit businesses here, the better we can respond – and push for a rethink where possible.”

The Federation of Small Businesses has described the announcement as a "huge disappointment".

Martin McTague, its national chair, said:

"Many small firms will not be able to survive on the pennies provided through the new version of the scheme."

"While the New Year should be a time of optimism and excitement, 2023 looks like the beginning of the end for tens of thousands of small businesses, which have been relying on the government energy support to survive this winter."