Energy Cap Time Limit Worrying Business

Business leaders in the UK give guarded welcome to government support package that will cap gas and electricity prices for all companies for six months from the start of October.

Business leaders in the UK gave only a guarded welcome on Wednesday to a government support package that will cut firms' energy bills by about half this winter.With energy prices surging because of the fallout from the Russian invasion of Ukraine, the government's Energy Bill Relief Scheme will cap gas and electricity prices for all companies for six months from the start of October.Although business chiefs welcomed the move, the uncertainty over what will happen when the six months are up is weighing heavily on their minds. Although the government has promised more help after the six months for "vulnerable" businesses, it remains unclear what this help will entail and what sectors it will go to.Chancellor of the Exchequer Kwasi Kwarteng said the package would prevent companies going out of business this winter under the weight of soaring energy bills.“We have stepped in to stop businesses collapsing, protect jobs and limit inflation," he said. “And with our plans to boost home-grown energy supply, we will bring security to the sector, growth to the economy and secure a better deal for consumers.”However, Matthew Fell, chief policy director at the Confederation of British Industry (CBI), described the cap as "a substantial short-term fix to a long-term problem".He said the scheme would especially benefit smaller companies but added: “Businesses will want to know more about the exit strategy and what happens when the six-month cap runs out. Working closely with business will be key to successful implementation.“The long-run solution is to double-down on energy security and to incentivise firms to push ahead with ambitious energy efficiency programmes to lower demand.”Kate Nicholls, CEO of the UKHospitality trade group, warned that the government must avoid "a cliff edge" when the support package ends on March 31 next year.“This intervention is unprecedented and it is extremely welcome that government has listened to hospitality businesses facing an uncertain winter," she said"The government has recognised the vulnerability of hospitality as a sector and we will continue to work with the government to ensure that there is no cliff edge when these measures fall away.”Shevaun Haviland, director-general of the British Chambers of Commerce, described the support package as "significant" and one that would ease the cost pressures piling up on businesses.“But the exact level of support will vary greatly from business to business depending on the detail of its contract, so some will inevitably do better than others," she added.“For those that will benefit, six months support is not enough for most firms to make plans for the future.“We understand there are a range of unknowns for the government in looking ahead, but without that reassurance very few firms will make plans to invest or grow."Ms Haviland pointed out that, aside from rising energy costs, a range of other challenges needed to be addressed including labour shortages, supply chain disruption and rising raw material costs.Jonathan Geldart, director-general of the Institute of Directors, said the government scheme would provide much-needed reassurance for numerous firms over the short term.“We look forward to working with the government in the coming months to ensure that any further relief is carefully targeted at those industries and sectors whose survival is most threatened by current economic conditions," he said.“Ultimately, however, business and government will need to work hand-in-hand to develop domestic energy sources and reduce consumption and dependency on expensive fossil fuels.”

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