Today’s announcement of the government plan to help cut energy bills for businesses, has been much anticipated. Tom Gilbey, equity research analyst at Quilter Cheviot comments on the news:
“Under the energy relief plans just announced, energy tariffs introduced by government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals). Had nothing been done costs might have doubled versus current levels with costs for businesses spiralling out of control. This plan will last for six months, starting in October, and then Liz Truss has said there may be some additional support which will be targeted at vulnerable businesses following a review in three months.
“There is no doubt that this energy relief plan is going to be helpful to businesses but, even with the scheme in place, prices will likely still cause significant issues for businesses over the winter especially those that are less well capitalised. In fact some companies have already flagged this isn’t enough to see them through the winter.
“How the plan will be paid for is still unclear with Truss currently planning tax cuts to be announced on Friday. However, it seems likely that the taxpayer will be paying for this down the line. Due to there being no price cap, the actual bills would have increased several fold, and it is likely to cost the government a lot. At present, the only companies not feeling the pain will be the energy generators which continue to rake in bumper profits, which may not wash well with the general public.”
