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Business energy support set to change in April 2023
The current price cap for energy support provided to businesses will end in March, and a new scheme from the government will come into effect that will reduce support to small/ medium businesses.
The price cap that came into effect in September 2022 is said to be costing the treasury £18 billion to subsidise, which they admit is 'too costly'. This news comes as costs continue to spiral, adding to the worries of SMEs.
Let's review the new energy relief program, how the latest prices of gas and energy will affect you and what you need to prepare for.
Energy support reduced for businesses in the UK.
The government has recently announced a new scheme to discount wholesale prices on gas and energy. Rather than simply setting a fixed price. What does this mean for your trade business? The latest Energy Bills Discount Scheme will drop to £5.5 billion, a significant decrease in support to that of the current scheme. These new rates will run from 1st April 2023 to Spring 31st, 2024.
Chancellor of the Exchequer, Jeremy Hunt, has recently portrayed the current plan as "unsustainably expensive".
Trade businesses that rely heavily on energy-intense production will see a larger level of support. If your company produces glass, steel and ceramics, for example, then you can expect more help.
Trade businesses and self-employed professionals have had a period of instability and uncertainty. This is due to the fact the government were due to decide on the new plans in December 2022, leaving businesses scratching their heads into 2023, wondering whether they will be able to afford their energy bills.
How much will you save?
In early January 2023, the treasury shared the news on the latest details included in the Energy Bills Discount Scheme. They confirmed that energy costs would be discounted as such:
- up to £6.97 per megawatt-hour for gas bills
- up to £19.61 per MWh for electricity
This latest scheme will come into effect during the next financial year - 1 April 2023 and last until the end of March 2024 (unless there is another review, of course).
The government added that large-scale businesses and manufacturers who use more energy on average and therefore have higher bills are set to receive bigger discounts (calculated at around £700,000 worth of support) over the next 12 months.
UK steel commented on the plans saying they welcome the support but pushed back on the government, saying it doesn't go as far as other European countries. It also added that the powers that be in the UK are 'betting on a calm and stable 2023 energy market, in a climate of unstable global markets'.
Is your business eligible?
Basically, there have been no changes to the rules. As in the past, the plan is accessible to anybody on a non-domestic contract, which includes:
- Voluntary organisations like charities
- Public sector environments like schools, hospitals, and care homes
To be in line with the requirements, your business should:
- Signed up to a fixed-price contract on or after 1st December 2021
- Currently signing up for a new fixed-price contract
- Deemed/out of contract or variable tariffs
- On flexible purchase or similar contracts
Your business may be ineligible if none of these points applies to you.
How can your business get help?
Whoever your energy supplier is will automatically take off the discount themselves, so your business doesn't have to do anything.
For peace of mind, you should notice the discount starting to take effect from May 2023, as this will be your first billed month of energy use during the new plan calendar window.
Should you have any issues, please contact your energy provider as quickly as possible. They should arrange for your discount to be applied if anything needs to be corrected.
But what if?
What if I can't afford my energy bills?
Don't let your worries rack up. If you are anxious about your energy bills and unable to pay them, then take an active approach to them; otherwise, you could land your business in financial trouble.
First, contact your energy provider to see if you can arrange payment deferral, reduction in payment, or gain access to hardship funds.
On top of this, consider seeking help and advice from Citizens Advice. Their consumer helpline helps with debt and bill affordability. Likewise, The Business Debtline is a charity that helps with free debt advice for small businesses.
What if I work from home?
Some trade businesses take care of their tasks from home, whether having a workshop in their garage or doing admin in the home office. To gain access to a business energy account, you need to be using at least 50% of your energy running your company at home.
Regarding home working, homeowners benefit from the energy price cap and can utilise the Energy Bills Support Scheme. This is a grant from the government which discounts your energy by £400. This discount applies to your bills automatically.
Why choose Rhino Trade Insurance?
Energy bills are a worry, and with other business price increases, don't take your eye off the ball and forget about your insurance. Rhino works extremely hard to keep our costs low. We offer various business-critical trade insurance options, from Public Liability Insurance, Tool Protection, Personal Accident cover and more.
If you are searching for a custom-made trade insurance policy, reach out to us today. Our specialists can assist with orchestrating the right cover for your business, meaning it's one less thing to worry about. Call us on 0116 243 7904 or visit our site here.