The government is set to take a review into a scheme to ensure businesses including care providers are protected from soaring energy costs.
The Energy Bill Relief Scheme was put in place for six months, and the government has committed to a review of future support beyond 31 March 2023. The findings will be published by the end of this year.
The government has said that it is not ‘sustainable for government to continue supporting large numbers of businesses.’ However, it recognises that some businesses, such as those which are highly exposed to energy prices and unable to pass through or absorb these costs sufficiently, may continue to require support beyond March 2023.
‘However, the overall scale of support the government can offer will be significantly lower and targeted at those most affected to ensure fiscal sustainability and value for money for the taxpayer,’ it added.
Objectives of the Review led by HM Treasury
- Significantly reducing the overall burden on the taxpayer/public finances, taking into account the government’s commitment to fiscal responsibility and the need to ensure value for money
- Ensuring support is targeted at those most in need and unable to adjust or absorb to recent energy price rises, without creating a category of businesses that rely on indefinite state support
- Ensuring any support provided is consistent with business being incentivised to increase the efficiency of their energy consumption
The government has indicated that businesses should use the significant support provided over the initial 6 months of the scheme to identify measures that protect themselves from the impact of high energy costs. This should include taking steps to improve energy efficiency and adapting operating models to a higher energy price environment where possible.
The work of the review is focused on the following areas:
- The effectiveness of the scheme in supporting vulnerable non-domestic customers
- Which groups of non-domestic customers (by sector, size, geography or other factors) remain particularly vulnerable to energy price rises, considering the latest price position and forward curves, alongside other cost pressures
- What barriers exist to these businesses absorbing increased energy costs or passing them through, and their ability to take steps to adjust to higher prices
- An assessment of wider factors, including the economic and public policy rationale for any support
- The most appropriate mechanism to support these customers – whether extending the existing scheme for some users, or replacing it with a different scheme
To achieve this, the review will consider:
- Prevailing economic conditions and the anticipated costs of support
- Evidence from businesses, suppliers, and market experts, which is being collated by the Department for Business, Energy, and Industrial
When will you know more?
Decisions on continuing support for businesses will be announced by 31 December 2022.