The UK government’s assistance for businesses to deal with the increase in energy costs is scheduled to be drastically reduced starting in April, which will result in an 80% increase in industrial energy costs and make British businesses even less competitive abroad.
Starting in April, the assistance—in the form of wholesale gas and electricity price discounts for businesses—will be much less generous than it is now because the government amended the energy bill relief program in January with the aim of “limiting taxpayers’ exposure to volatile energy markets.”
The UK’s manufacturing, heavy industry, and hospitality sectors are already struggling, and a significant reduction in support for energy bills would be a serious blow to all of these industries.
Energy-intensive industries have seen their energy costs soar over the past year after the Russian invasion of Ukraine sparked a rally in energy commodities and power prices.
The UK’s industries suffered from soaring energy costs last year, and despite some government support, they may have to announce further curtailment in production. For example, soaring energy bills threaten to collapse the UK’s ceramics industry. The industrial area around Stoke-on-Trent has seen difficulties over the past year, and some companies have had to close shop due to unbearable costs.
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“Whilst we welcomed the Government’s non-domestic Energy Bill Relief Scheme as a lifeline, their announcement of a review sparked concern. We warned that if Government support was downgraded, then this industry would be on a cliff edge. The Government must not leave us in a precarious position,” Rob Flello, chief executive of the British Ceramic Confederation (BCC), said in December.
In January, the government unveiled a new “Energy Bills Discount Scheme” for UK businesses, charities, and the public sector starting in April. Under the new scheme, support for businesses will be slashed, which could raise their energy bills by around 80%, trade associations have warned.
The BCC welcomed the extension of the period of support but said that the new scheme is not as supportive or as far-reaching as the original one.
“UK ceramic manufacturers are still competing against unrestricted imports from countries that provide a far higher level of support to their own manufacturers,” Flello said last month. The Energy Intensive Users Group said that the new scheme “falls short compared to what other European countries provide.”
Story adapted from Oil Price
