Energy companies call on government to help local businesses with soaring electricity bills  

Energy companies, including Shell, Centrica and Ovo, have called on the government to introduce Covid-style support schemes to help local businesses cope with soaring gas and electricity bills.  

In a letter to chancellor Nadhim Zahawi on Friday, industry lobby group Energy UK, which represents about 100 suppliers and retailers, said it was concerned that the tenfold rise in wholesale gas prices compared with the start of 2021 would affect the “viability of small businesses”, as well as local authorities, schools, leisure centres and hospitals. 

The group urged the government to introduce grants similar to the £45 billion paid through local authorities during the coronavirus pandemic, a Treasury-backed loan scheme and exemptions from business rates. It also called for value added tax to be removed from energy bills.  

Although households are protected from sudden swings in the wholesale cost of gas by a price cap, there are no such measures for businesses and small companies. 

Mathew Lawrence, director of the Common Wealth think-tank, welcomed the calls to support business but described the measures recommended as a “temporary fix that do little to address a failing market”.  

“Some of these companies calling for support to business are making substantial profits themselves during the current crisis, raising questions as to why they can’t dip into their own pockets,” Financial Times quoted Lawrence as saying. 

Meanwhile, British finance minister Nadhim Zahawi said he was very concerned that energy price rises could have a scarring effect on businesses. 

“I’m very concerned of the scarring effect on businesses,” he told reporters on Friday (2). 

Zahawi is drafting a suite of proposals to support companies through the imminent crisis, including cuts to VAT and business rates, as well as specific tax breaks for energy-intensive industries. He told The Times on Friday (3) that failure to act could force many companies into bankruptcy and cause long-term economic “scarring”.