Firms fear ‘worst to come’

In recent months, rising energy prices have caused concern among households and businesses. The government announced an extension of support for firms.

However, the new scheme for schools, charities, companies and hospitals will be less generous than the old one.

This will allow firms to get a discount at wholesale prices instead of having their costs capped under the current scheme.

They will only be able to benefit when the costs are high. Some business lobby groups have called for additional assistance.

We asked companies across the country about the impact of the new government plans.

“It will get worse before you get better”

Sarah Curtis doesn’t feel the worst, despite avoiding some price increases through careful planning for her business.

Her Ipswich boatkeeping yard, which she runs for 17 years, employs heavy machinery in the repair shop. People who store their boats on-site use heaters and dehumidifiers.

Sarah states, “I use an electricity broker to find the best prices. And I only have four full-time employees.”

She has benefited from lower business rates, as well as the ability to lock in energy prices for her firm until 2026.

She claims she is lucky “for now”, whereas other businesses who only secured fixed-price agreements last year might have to face higher costs.

“[Further support] She explains that the government must pay back what it owes. “The government must be realistic at some point and it is certain that business will bear the brunt of this.”

In its announcement, the government said it was scaling back energy subsidies for the next financial year to £5.5bn in a bid to reduce how much taxpayers are exposed to spiralling costs.

Sarah warns that it will get worse before it gets better.

“Any help is most welcome”

Herb UK is managed by Raoul Perfitt. It produces haircare products in Lymington.

He said he was happy that the company’s new energy support program, which will last until March 2013, will provide “some certainty to help plan and budget”.

Herb UK has seen an increase in wages, warehouse rents, and raw material costs over the past year.

Plus the firm has seen shipping costs on 40ft containers increase from £4,000 to £10,000 – and Raoul says he is starting to feel squeezed.

He said he had already received resistance from retailers when it came to suggesting that he might have to pass some of the higher costs on.

“Obviously, we need to have time to determine exactly how much this will cost.” [new plan] Our bills will be reduced by… He says that in these difficult economic times, any assistance is welcome.”

“It’s just not enough”

Adrian Hanrahan calls for additional support for manufacturers, saying “It is not enough.”

Robinson Brothers, a West Bromwich-based chemicals producer, is his management director.

New plans allow high-intensive energy users (e.g., those working in glass, steel, or ceramics) to receive higher discounts on their monthly bills.

Adrian believes his company does not qualify for additional assistance even though Make UK (the manufacturing trade organization) said that the announcement was a “welcome step”.

“Our energy bill went from £1.9m… to £3.4m last year,” he says, adding it is “set to get higher without the government help”.

“It is detrimental to our business size – we only possess one pot of cash and most of it is being used for daily costs. We are redirecting our money away from investing to survive.”

He also wondered if the scheme was more effective for UK companies.

“Not seeing any changes in bills yet”

Clive Watson is chairman of City Pub Group.

The group currently operates more than 40 pubs in England and Wales. He says that rising energy costs are hindering the group’s expansion plans.

“It is great that energy prices have slowed down, but it’s just not showing up in the bills, just yet,” says he.

Monday’s Treasury confirmation also confirmed that Chancellor Jeremy Hunt had written Ofgem to complain about firms not offering discounts to customers.

Clive suggests, however that confidence will not return until we see bills at the same levels as last year.

While wholesale gas prices have fallen to levels that were comparable to those before Russia’s invasion, they remain three-to-four times higher than their average long-term.

Clive said that he is still “cautious” when he looks ahead to 2023.

He adds, “My long-term planning has been put on hold due to the short-term risk.”