COST OF LIVING CRISIS: Energy Bill Relief Scheme announced by UK Government good news for businesses in the Highlands – economist
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Measures announced by the UK Government to help protect businesses from rising energy costs will be welcomed in the Highlands, according to a local economist.
Under a new Energy Bill Relief Scheme, the government will provide a discount on wholesale gas and electricity prices for all non-domestic customers – including all UK businesses, the voluntary sector and the public sector such as schools and hospitals – whose current gas and electricity prices have soared in light of global energy prices.
The support will offer discounts for six months from October 1 and comes after the government announced plans to help households with their soaring bills for two years.
Economist Tony Mackay gave his initial response to the announcement.
"The price cap is undoubtedly good news for businesses in the Highlands," he said.
"Energy consumption in the Highlands is 25 to 30 per cent higher than the Scottish and UK averages and most energy prices are also higher than those averages.
"The reasons for that include the extensive geography of the region and the colder weather in the winter.
"Most businesses in the Highlands are small ones, particularly those in the tourism industry, and they have been struggling recently because of the impacts of the various coronavirus pandemics and also the UK’s Brexit decision to leave the European Union.
"There are relatively few large businesses, such as LifeScan in Inverness, Norbord at Dalcross and Global Energy at Nigg.
"There are also medium-sized businesses in industries such as whisky distilling and fish farming and processing."
Mr Mackay noted the price cap for businesses was only for six months in contrast to the two years for domestic households.
But he also acknowledged the UK Government had indicated it would almost certainly extend the period for vulnerable businesses.
"Those will include pubs and restaurants which are very important in the Highlands economy, particularly during the main tourist season," Mr Mackay said.
"The durations of the various price caps will depend to a large extent on what happens to gas prices.
"They have soared massively this year because of the war in Ukraine. If there is a resolution to the war then energy prices should fall substantially.
"The new UK Prime Minister Liz Truss and her Conservative Government are very keen to reduce public spending, so I am sure they do not want to extend the energy price cap for businesses other than those defined as vulnerable.
"The next six months will, therefore, be very important for many local businesses."
Prime Minister Liz Truss said: "I understand the huge pressure businesses, charities and public sector organisations are facing with their energy bills, which is why we are taking immediate action to support them over the winter and protect jobs and livelihoods.
"As we are doing for consumers, our new scheme will keep their energy bills down from October, providing certainty and peace of mind.
"At the same time, we are boosting Britain’s homegrown energy supply so we fix the root cause of the issues we are facing and ensure greater energy security for us all."
