Treasury slashes support for business in new energy bill scheme

The government has announced the new Energy Bills Discount Scheme (EBDS), a scaled back version of the Energy Bill Relief Scheme (EBRS) which it replaces.

The new package of support will help businesses with their energy bills for another year but at a significantly lower level.

Under the new plan, organisations including businesses, charities and schools will receive a discount on wholesale prices rather than have their costs capped, as is the case with the current EBRS.

From 1 April 2023 to 31 March 2024, eligible non-domestic customers will see a unit discount of up to £6.97 per MWh automatically applied to their gas bill and a unit discount of up to £19.61 per MWh applied to their electricity bill.

A higher level of support will be provided to businesses in sectors identified as being the most energy and trade intensive – predominately manufacturing industries.

The current scheme is estimated to cost the government about £18 billion over its six month run, compared to £5.5 billion for the year of the new scheme.

The plan was welcomed by the Confederation of British Industry, which said it would “provide respite for many firms”.

“It’s unrealistic to think the scheme could stay affordable in its current form, but some firms will undoubtedly still find the going hard,” said CBI director for decarbonisation policy Tom Thackray. “The government has done much to protect businesses through the energy crisis. It must remain open, flexible and pragmatic in its approach to volatile wholesale energy markets as the year unfolds.”

Gareth Stace, director general of UK Steel, has also welcomed the announcement, but said the extra support for his industry might still not be enough. “There will be concerns that the newly announced support falls short of that of competitor countries, including Germany,” Mr Stace said. “The Government is betting on a calm and stable 2023 energy market, in a climate of unstable global markets, with the scheme no longer protecting against extremely volatile prices.”

Less sanguine about the new support scheme, Martin McTague, national chairman of the FSB, warned: “Many small firms will not be able to survive on the pennies provided through the new version of the scheme. Two pence off a kilowatt-hour of electricity and half a pence of gas is totally insignificant for small businesses.”

British Chambers of Commerce director general, Shevaun Haviland, added: “While we welcome the 12-month duration of this package, its value is nowhere near far enough and means that for some firms, energy will now be a cost too far.

“We understand government must consider public finances, but any support package, short or long term, should be right for business – otherwise we’re going around in circles. The wrong type of support will continue to see business confidence deplete and Government having to revisit its package.”