Wednesday 21 September 2022 02:50 PM Farmers, pubs and hotels 'suspicious' of PM's energy bailout and say 'six ... trends now

Wednesday 21 September 2022 02:50 PM Farmers, pubs and hotels 'suspicious' of PM's energy bailout and say 'six ... trends now
Wednesday 21 September 2022 02:50 PM Farmers, pubs and hotels 'suspicious' of PM's energy bailout and say 'six ... trends now

Wednesday 21 September 2022 02:50 PM Farmers, pubs and hotels 'suspicious' of PM's energy bailout and say 'six ... trends now

Farmers, pub landlords and hotel bosses remain gravely uncertain of their futures after Liz Truss today unveiled a massive intervention in the energy market to cap prices and help ease fears of a winter of economic turmoil.

The new Energy Bill Relief Scheme will provide a discount on wholesale costs for all non-domestic customers from October until next March, with further targeted help promised after that.

The Government will cap the wholesale price paid by non-domestic customers, with the 'supported wholesale price' expected to be £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas.

This is around half the expected wholesale price on the open market, and equivalent to the cap on household energy bills that will be set this October and run for two years.

Chancellor Kwasi Kwarteng says the move will bring 'security to the sector, growth to the economy and secure a better deal for consumers'.

Businesses have faced skyrocketing energy bills in recent months and have been left with a choice between passing the cost onto customers or absorbing the devastating financial hit and facing closure - with many having to opt for the latter.

And while calls for a support package have been heeded by the government, businesses have been left fearing that energy bills could spike after March and put firms at further risk, while there is also concern over who will be able to access support after the deadline.

Meanwhile, British farmers have warned of soaring energy bills leading to 'civil unrest' due to 'severe food shortages' and empty supermarket shelves next year. 

Liz Webster, the chair of Save British Farming, told MailOnline that farmers are having to reduce the amount of crops they plant due to fears over rising costs, adding that the situation for farmers is now far worse than they faced during the Covid pandemic. 

Guy Adams, who owns the Isle of Barra Beach Hotel, said it would have been cheaper for him to close his site as his bills had risen by an eye-watering 377 per cent since the start of the year.

He added that 'the Government isn't allowing' that his hotel is seasonal and will close at the end of this month, leaving him in an 'absolutely impossible situation' to set prices for bookings for when it is due to reopen in May.

Guy Adams, owner of the Isle of Barra Beach Hotel in the Hebrides, pictured with his wife Teresa Jenkins

Guy Adams, owner of the Isle of Barra Beach Hotel in the Hebrides, pictured with his wife Teresa Jenkins

Winchcombe Farm, a five-star boutique holiday resort run by husband and wife team Jo Carroll and Steve Taylor in south Warwickshire, has had to downsize its workforce

Winchcombe Farm, a five-star boutique holiday resort run by husband and wife team Jo Carroll and Steve Taylor in south Warwickshire, has had to downsize its workforce

Andrew Brown, an arable farmer in Rutland, East Midlands, says rising energy bills have also had a huge impact on British farming

Andrew Brown, an arable farmer in Rutland, East Midlands, says rising energy bills have also had a huge impact on British farming

The owner of a Cheltenham-based online retail gift company, also called Besty Benn, has said she is 'suspicious' about the six-month plan

The owner of a Cheltenham-based online retail gift company, also called Besty Benn, has said she is 'suspicious' about the six-month plan

The energy support available for businesses and how long each will get

The Government today announced a package of energy support for businesses after months of soaring prices.

Why do organisations need support on their energy bills?

The cost of gas and electricity has soared in the last year for several reasons, including Vladimir Putin's invasion of Ukraine, which cut gas supplies to Europe.

It has put households under pressure, but businesses, charities, schools and others are also having to pay record amounts for their energy.

Without some kind of Government support, experts worry that tens of thousands of companies might be pushed into collapse because of the massive bills. This would in turn spark mass job losses.

What support is available for non-domestic users?

The support that a company, charity or other organisation will get depends on what kind of energy deal it has already.

Most households use energy in similar ways - gas to heat their homes and cook, and electricity to run lights, TVs, laptops and phones, among other things - but businesses use energy differently. They can range from glass or steel makers who need huge amounts of gas to run their furnaces, to small shops which have big fridges and freezers.

So there are many different types of energy tariffs to cater for businesses.

In general the support will try to cap the wholesale price of energy at £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas.

This will fluctuate for some companies if wholesale prices soar further than expected.

How long will the support last?

Six months in the first place - but the Government said there might be some kind of support available later for those businesses and organisations most at need.

What will replace it?

This remains to be seen. The Government said it would review the policy after three months to see how it could be replaced.

Business leaders said it is vital that there is no cliff-edge in March when the support is due to end.

The Government said its review will "focus in particular on identifying the most vulnerable non-domestic customers and how the Government will continue assisting them with energy costs".

How much will it cost the Government?

We do not know yet. The Chancellor is expected to announce some detail on Friday in his mini-budget.

The cost is likely to run into the tens, if not hundreds, of billions of pounds.

It will also depend on what happens on wholesale energy markets. If gas prices fall then the plan could get much cheaper, but it could also rise if prices increase.

Will this be enough to help businesses through the crisis?

Business groups welcomed the support, and appeared to think it will help their members.

However they are worried about the length of the support. More will probably be needed after the initial period ends, they said.

Businesses are still likely to be under pressure this winter - even with the cap bills will be high, while wages are rising and materials are becoming more expensive.

'It will allow many firms that were facing closure, or having to lay off staff or reduce output, to keep going through the winter,' said Shevaun Haviland, direct general of the British Chambers of Commerce.

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Mr Adams told MailOnline: 'We reopened after 19 months in May last year. It started pretty well, then a number of things have happened.

'I have been trying to understand what it [the support package] exactly means. There are lots of factors that will affect how helpful it actually is. How do I charge room rates for next summer when the support package could end in six months?

'We are a seasonal hotel, so I am taking bookings for next year. If I work my prices based on the government package today and in six months time it foes, then I will go bust. If I take no notice of it and work my prices, then I will get no trade.

'My energy prices have gone up 377 per cent, so halving that is still a massive, ludicrous increase.'

Mr Adams, who owns the hotel with his wife Teresa Jenkins, added: 'You cannot say to a guest, "yes let's book you into this room, and by the way we will tell you on the day what the price will be".'

'It is a difficult situation and I am glad they are trying to address the issue, but from a business point of view, it raises as many questions as it solves.' 

Jo Carroll, owner of the independent glamping retreat Winchcombe Farm in Warwickshire, says she was left with no choice but to downsize her workforce amid soaring energy bills.

She said: 'We are definitely drawing back our purse strings. We are not going ahead with two extension plans. This situation is worse than the pandemic. We are having to downsize our team and cut hours for staff. It is having a big impact already.

'We run between 90 to 95 per cent capacity normally, but we are currently at less than 50 per cent. Yet bills are increasing massively.'

Addressing the support package, Mrs Carroll added: 'I want to see how it is delivered on the ground as it is really sparse in detail. I have already messaged my gas and electricity provider to find out what it means for me. We are still recovering from Covid and from being shut down for months and still trying to get back on our feet.

'It could have gone a lot further. We are the biggest employer in our area and need more certainty. A relief on business rates or a cut to VAT would provide more help as inflation keeps rising.

'I put my staff salaries up recently and I can't just reduce them again. You are still looking at increasing telephone bills, laundry costs - it is all still going up. And those sorts of things go up, they don't come down.

'We still have no clarity. It [the support package] is only for six months. I plan for two years. I am taking bookings and weddings in 2024 and will honour those prices, but I am risking taking big losses because I don't know how much my costs are going to be when they come around.

'We have to take those because our bookings are significantly lower at the

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