On Monday 9th January 2023, UK Chancellor Jeremy Hunt announced the changes to the Energy Bill Relief Scheme (EBRS) that will be coming in from April 2023.
The current scheme, which caps the unit cost of gas and electricity for all businesses, expires at the end of March. From 1st April, non-domestic businesses in the UK will have access to the new Energy Bill Discount Scheme (EBDS) that will see discounts on wholesale energy prices, rather than a fixed price.
We are still waiting for more details about how this will affect hospitality businesses. In this article, we’ve explored exactly what the EBDS offers and how it might impact the sector.
Breakdown of the business rates changes
From Saturday 1st April 2023, the current EBRS will be replaced by the EBDS, potentially reducing the support businesses receive from the government.
In his announcement, the Chancellor stated that the current plan was “unsustainably expensive.” It will cost £18bn over six months, while the new package will run for a year and cost £5.5bn.
So, starting from April 2023, companies paying higher energy prices will have their bills automatically discounted by up to £6.97 per megawatt hour (MWh) for gas bills and up to £19.61 per MWh for electricity bills.
"Today I can confirm a new Energy Bill Discount Scheme for businesses, charities & the public sector.”— HM Treasury (@hmtreasury) January 9, 2023
Exchequer Secretary to the Treasury @jcartlidgemp sets out the new 12 month energy scheme, providing support in the face of high energy prices. pic.twitter.com/4llQoORVEg
Businesses who have high energy costs such as glass, ceramics and steelmakers, will get a slightly bigger discount than others. Breweries fit into this category of “energy-intensive” firms, described as associated with higher energy use and less able to pass costs onto customers.
In short, the current scheme sees energy prices capped for businesses. The new scheme coming in from April will see a discount on wholesale prices. Although UK gas prices have fallen below the limit, there are still concerns that it will impact businesses who are currently receiving the support.
What it means for UK hospitality businesses
So far, there’s been no news on a sector-specific support for hospitality or other more vulnerable sectors. UK Hospitality has predicted that the new, lower level of support will see a total £4.5billion hike in bills for the sector compared to the previous scheme.
"The new, lower level of support will see a total £4.5 billion hike in bills for the sector compared to the previous scheme."@UKHospKate has responded to the new @hmtreasury Energy Bill Discount Scheme announced today. Read our full response 👇https://t.co/onyp03iA46— UKHospitality (@UKHofficial) January 9, 2023
The EBDS will not apply to those paying lower energy prices. UK Hospitality had previously raised concerns with the government after they that the support was originally to come to an end in April 2023. However, despite the extension to the support schemes, UKH Chief Executive Kate Nicholls says “the absence of a sector-specific package that helps vulnerable sectors like hospitality will still result in higher bills.”
Other support available to UK hospitality businesses
In the Autumn Statement released in October 2022, the government outlined more details of support packages available to those in the hospitality industry, such as an increase in National Living Wage and a £14bn package of support for business rates.
Catch up on some of the key takeaways: Autumn Statement: What does it mean for UK hospitality? | Matthew Clark