21 Sep 2022

Energy cap for businesses is a significant step in right direction, says East Midlands Chamber – but long-term solution urgently needed

Responding to the Government’s announcement of an Energy Bill Relief Scheme to introduce a cap on wholesale energy bills for businesses, East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) chief executive Scott Knowles said: “We have been calling for the Government to introduce an energy cap for businesses for some time now, so this intervention marks a significant step in the right direction in helping our firms with some of the cost pressures that have been piling up on their doorstep.

“It will allow many companies that were facing an extremely challenging autumn and winter period as a result of eye-watering energy bills to keep going.

“This is also an important support package for consumers as it prevents some of these escalating costs from being passed down to end customers, which ultimately continues to drive inflation. Almost six in 10 (58%) East Midlands businesses had indicated in our latest Quarterly Economic Survey they would be forced to raise their own prices due to the increased costs they are facing.

“It’s important to note, however, that the exact level of support will vary greatly from business to business depending on the detail of its contract, so some will inevitably do better than others. Getting this saving passed on to business as quickly as possible should also be a priority as every day puts some firms closer to the edge.

“The most obvious limitation to the Energy Bill Relief Scheme is that it only offers six months’ support, unlike the equivalent package for households that caps bills for two years.

“Businesses, above all else, require certainty about the future and the lack of it has already given a massive knock to confidence in recent times. We have recorded a 17% drop in confidence regarding turnover prospects and 21% for optimism of increased profitability between the second and third quarters of this year.

“We understand there are a range of unknowns for the Government in looking ahead, but without further reassurance very few firms will make plans to invest or grow. It’s vital they are given a clear picture beyond April next year, while a long-term solution to energy security that involves businesses is developed over the coming months.

“The Chancellor’s mini-budget on Friday also offers a golden opportunity to get confidence and investment intentions – which are down on a quarterly basis by 6% for each of training, and plant and equipment, among East Midlands businesses – back on track by addressing the many other challenges facing firms.

“These include labour shortages, supply chain disruption and rising material costs. To truly revitalise our economy for the difficult months ahead, there must be a clear long-term plan that gives business the confidence to grow.”