Energy cap for businesses welcomed

Government plans to cap energy prices for businesses this winter have been welcomed amidst rising costs. 

However, some business leaders have expressed concerns that the support “will not go far enough,” while others have highlighted cost pressures that remain.

The new Government Energy Bill Relief Scheme will reduce energy prices for non-domestic energy customers, including businesses, charities and public sector organisations, for six months beginning in October. 

The scheme has been introduced to support businesses following “significant rises” in energy costs, and acts as an equivalent to the Energy Price Guarantee launched last month for households.

Wholesale prices are expected to be fixed at £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas, which the Government has said is less than half the wholesale prices anticipated for the winter.

The scheme will apply between 1 October 2022 and 31 March 2023 on fixed contracts agreed on or after 1 April, as well as to variable and flexible tariffs.

Taking the form of a p/kWh discount, the support will automatically be applied, with the first reduction to be seen in October bills, typically received in November.

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

A review is set to be published in three months’ time to identify ‘vulnerable’ organisations that require further support beyond March 2023.

The Energy Bill Relief Scheme will apply in England, Scotland and Wales, with a parallel scheme offering equivalent support and based on the same criteria, to be established in Northern Ireland.

Previously, businesses were not covered by an energy cap, unlike households.

Views from across optometry

As the situation evolved throughout the year, OT has heard from practices who have carefully monitored operational costs.

This recent announcement appears to have been welcomed in optometry, as well as across business groups and organisations.

A spokesperson for Specsavers told OT: “We welcome anything that supports our joint venture partners and reduces the inevitable impact that increasing energy costs are going to have on all business owners.”

A poll of more than 70 OT readers in August found that 63% reported a drop in conversion rates as a result of cost of living pressures, while practices have shared the effects of pressures on their local High Streets.

We feel this is a welcomed initiative and it will go towards reducing nervousness

Commenting on the recent announcement, Martin Ashcroft, chief financial officer for Hakim Group, told OT: “We feel this is a welcomed initiative and it will go towards reducing nervousness during a time when many practices are following the ongoing media narrative and feeling cautious about what consumer spending might look like in the coming months as we head into a period of higher interest rates, ongoing high inflation, and the related challenges around the cost of living.”

Ashcroft suggested that a level of support from the Government around business rates would also be welcomed, “so that this can provide additional relief against inflation that practices are having to manage.”

“The new Prime Minister has been quoted on a number of occasions in relation to her desire for businesses to continue to invest, in order to stimulate job creation and growth in the economy,” he continued, “We hope that some of the anticipated policy changes will be pro-business to support this ambition.”

Ryan Leighton, CEO of Leightons and The Hearing Care Partnership, told OT that the help to limit the impact of energy price increases is welcomed.

“Of course, this is a temporary measure and I doubt that the optical sector would be seen as ‘most vulnerable,’ so come April we will need to prepare for that cap to be lifted and costs to rise,” Leighton said. “There is simply no quick fix here against the rising costs and spiralling energy bills, both for business and consumers.”

Looking ahead, then, Leighton shared: “Our view at Leightons is a simple one: now has to be the time to get even more focused on delivering the very highest standards of care, elevate the experience, deliver exceptional quality, and make it easier for patients' pockets with eye care plans or payment plans.”

The business will also seek to forge stronger partnerships with suppliers, keep innovating and “investing wisely,” he added.

There is simply no quick fix here against the rising costs and spiralling energy bills, both for business and consumers

While the measures have been welcomed, many noted that the exact details of support will vary between businesses and organisations.

Anglela Davey, managing partner from the independent family-firm, Haine & Smith Opticians, told OT: “With 20 practices, the rising costs are a concern.”

“Whilst it is reassuring to hear that some relief will be provided by the Government, not enough detail has been provided yet in order that we can plan,” Davey added.

Business leaders weigh up pressures

The British Chambers of Commerce (BCC), a business network made up of chambers representing all sectors across the UK, had been calling for the government to take action in recent months and called the package of support “significant.”

Shevaun Haviland, director general of the BCC, agreed that the measures will “ease the cost pressures that have been piling up on businesses,” and urged effective legal oversight to ensure no businesses miss out on support.

However, Haviland also warned that six months of support would not be enough to enable businesses to make plans for the future: “We understand there are a range of unknowns for the Government in looking ahead, but without that reassurance very few firms will make plans to invest or grow.”

Ahead of the Chancellor of the Exchequer’s mini-budget this Friday (23 September), Haviland noted that other challenges persist, such as supply chain disruption and the rising cost of raw materials.

She noted: “To truly revitalise our economy for the difficult months ahead then there must be a clear long-term plan that gives businesses the confidence to grow.”

Whilst it is reassuring to hear that some relief will be provided by the Government, not enough detail has been provided yet in order that we can plan

Tina McKenzie, policy and advocacy chair for the Federation of Small Businesses (FSB), said it was “encouraging to have the clarity from Government on the form that its support will take.”

The FSB highlighted that some businesses will fall outside of the eligibility for support, and called for a hardship fund that would offer support in these instances.

McKenzie also urged energy companies to “play their role” in supporting small business customers, asking suppliers to commit to lowering standing charges as far as possible.

The next step for businesses will be to assess what the measures mean in terms of their contracts, the FSB said, while businesses will also be seeking to understand what will be defined as ‘vulnerable’ businesses or sectors in the upcoming review of the scheme.

While the new scheme provides a measure of relief for organisations, there are concerns that it will not be enough.

NHS Confederation chief executive, Matthew Taylor, said health leaders welcome the support, but “fear it will not go far enough at a time when many hospitals have already seen their bills increase by as much as 300% in the last year and primary care sites are also facing soaring costs.”

“Simply put, money spent on rocketing energy prices is money that cannot be spent on patient care,” Taylor added.

The membership organisation, which represents the healthcare system in England, Wales and Northern Ireland, noted that the period for review “will be vital as this crisis clearly will not have abated by April,” adding that NHS sites need certainty to make their plans for the future.

Beyond the current situation, however, Taylor called for long-term action. He said: “In the context of this energy crisis, we need to redouble our efforts on improving energy efficiency across the NHS.”