Industry responds to Government's extension of energy bill support

The new Energy Bills Discount Scheme for businesses, charities and the public sector was confirmed yesterday (9 January) ahead of the current scheme ending in March.

Sectors identified as being the most energy intensive – including food and drink manufacturers – will receive a higher level of support, with businesses in scope to receive a gas and electricity bill discount capped by a maximum unit discount of £40/MWh for gas and £89.1/MWh for electricity.

Non-domestic customers with a contract with a licensed energy supplier will be automatically compensated up to £6.97/MWh for gas and up to £19.61/MWh for electricity.

Commenting on the introduction of the new scheme, Food and Drink Federation chief executive Karen Betts said the Government’s continued support was welcome at a time of great pressure being experienced by the food and drink industry.

‘Great deal of pressure’​

“Manufacturers are under a great deal of pressure as they try to keep their heads above water while absorbing very high and volatile energy costs in order to keep the cost of everyday food and drink as low as possible for shoppers,” ​said Betts.

“This support recognises the criticality of the food and drink supply chain and that our businesses use constant levels of energy year-round and it should help slow record levels of food and drink inflation. ​

“What’s important is we remain in close dialogue with government as the situation continues to evolve throughout the year for which the support is being provided, given how fast-moving the energy situation has become.”​

Provision Trade Federation director general Rod Addy drew attention to the financial struggles faced by both consumers and industry and the wider geopolitical issues that need to be factored into the Government’s support.

“Dairy, meat and fish processors face substantial rises in their energy costs this year, threatening to tip them over into financial difficulties,” ​said Addy. “Consumers are grappling with a cost-of-living crisis, of which energy will continue to be a big driver, causing them to rein in retail spend over Christmas. ​

‘Vulnerable market’​

“Wholesale gas prices have reduced, but the market remains vulnerable to developments in the Ukraine war, a cold snap and/or a surge in demand as China eases Covid restrictions. This further Government help for all sizes of business is therefore vital and welcome and provides longer term security. ​

“However, the battle to cut inflation must continue to protect businesses’ profits, safeguard food sector investment and guarantee shoppers access to affordable nutritious food.”​

Meanwhile, Ian Gadsby, managing director of Ylem Energy, urged the Government to look at the bigger picture behind the rampant growth in energy prices.

“The Treasury’s announcement will undoubtedly be welcomed by businesses across the UK, and the additional support to energy intensive sectors, such as food and drink production, manufactures and chemical producers will be a great help to companies in these sectors,” ​said Gadsby. “The extension of support does not mean we can ignore the stark reality that energy costs are still around twice as much as businesses would have been paying this time last year. ​

“With the scheme set to end in March 2024, now is the time, for energy intensive industries to think about the future of their supply and consider on-site energy generation to remove themselves from the harsh winds of the on-grid market.”​

Safety net​

Nick Allen, chief executive of the British Meat Processors Association, said: "All support is very welcome from government, and the scheme is helpful. It’s appreciated that we now have clarity on the length of time it will be in place albeit at a reduced level. But we must recognise that the energy market is very volatile and changes quickly when impacted by world events. We must also accept that the government cannot provide full protection for businesses.​

"While the scheme provides a safety net, the reduction in that protection will impact businesses, and some of these increased costs will have to be passed on to the consumer, which will have a corresponding impact on inflation. It is in everyone’s interest that the government monitors the markets, particularly the prices being charged by energy companies, and responds accordingly when they need to."​