Energy price guarantee for business: The Support Package Doesn’t Go Far Enough
Posted on: September 27th 2022 · read
In his Mini Budget on Friday 23 September, the Chancellor produced no long-term measures to address the energy crisis. Without more certainty for businesses on energy costs, a growth strategy can’t get off the ground.
It was deeply disappointing not to see at least an outline of investment measures to progress the green agenda. Instead, most of the week seems to have been focused on fracking.
Given businesses only have a secure energy price cap for 6 months, offering an interest free loan for renewable investments would have gone some way to ensuring we don’t grind to halt in restructuring the energy market.
Hear our Head of Renewable & Sustainable Energy Sector, Rachel Nutt views on the Mini-Budget
The fact the energy price guarantee only applies to businesses for 6 months is a huge problem. It might keep businesses afloat for the time being, but if you want to sell your business, or borrow from the bank to invest, then without the energy price cap many businesses are completely unviable. Are banks expected to lend in the hope there is further energy price security? Is someone going to pay good money for a business on today’s profitability that in 6 months will not be able to afford its energy costs?
There seems to be an assumption that the announcements around National Insurance, Corporation Tax, and the additional rate of Income Tax, will invigorate the economy and offset the interest rate and energy price rises. But without the support of funders, considerable relaxation in lending, no tax cut can make activity happen.
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