Last week, the new Prime Minster announced a 6 month scheme to help businesses with rising energy costs. Although further details are awaited, the scheme is likely to reflect the support being provided to consumers, by offering a guarantee that discounts the unit costs for gas and electricity. Recognising that businesses have not benefitted from Ofgem’s price cap and may have been unable to fix their energy prices, this will provide comfort to those businesses that are particularly reliant on gas and electricity. It may also help to reduce inflation, which has also reached levels not seen for decades. However it is likely to take some time before inflation gets back to the Bank of England’s targeted 2% and energy costs are still high. For many businesses this support might see them through the winter months, but with other issues such as supply chain challenges and the level of debt many businesses are carrying will this be enough?
Additionally, these measures come at a huge cost and presently we don’t know exactly how they will be met. With the new Prime Minister’s promise to lower taxes (including the possibility of cancelling the uplift in corporation tax due next year), widely reported speculation has suggested that
s the consumer cost will need to be recouped from customers’ future bills once prices stabilise but we will have to wait to see. The newly appointed Chancellor will address this when he presents his fiscal statement later this month. Either way, is this measure sufficient to help struggling businesses or are the challenges simply being kicked down the road (for a short while at least)?
For more information on support that is available to UK businesses including ways to address supply chain issues and manage business risk, see our business viability guide.