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What does the Autumn statement mean for business energy

Updated: May 2, 2023



UPDATE: 21/11/2022


What is the Autumn Statement

Jeremy Hunt finally made his autumn statement. This covered both the developments in the energy sector and his promises to support businesses during the upcoming year.


In October 2022, Jeremy Hunt was appointed chancellor with the mission of fixing the disastrous Mini budget Kwasi Kwarteng had outlined.


While he has already overturned the majority of Kwarteng's announcements in the small budget, the incoming chancellor's first official announcement comes in this Autumn Statement.


The chancellor announced his £55 billion plan, of which $13 billion would support businesses with their business rates. Businesses will be helped and kept from having to make excessive payments the next year thanks to the 14 billion support plan.


With this assistance, firms will be guaranteed government-funded transitional relief for the following year.


The chancellor has made sure that after April 2023, vulnerable industries like hospitality would continue to get targeted energy support. Hunt has stated that additional information regarding the nature of this help will be released.


Hunt announced his ideas for residential energy support in addition to expressing his views on business energy support. Domestic users' average energy costs will increase from the current £2,500 assured average to £3,000 starting in April 2023.


Even while this increase will have an effect on homes, according to Hunt, it would have increased to an average of £4,000 year without government assistance.


Windfall taxes will help to pay for energy support

An enhanced windfall tax will be imposed on energy corporations and generators to help pay for energy support. It will bring in an extra £14 billion the following year. Currently 25%, the tax will now increase to 35%.


Jeremy Hunt stated that he had no issues with windfall taxes as long as they were applied to legitimate windfall gains brought on by a rise in the price of energy globally.


A 45% profit tax will also be applied to electricity generators. This is because they make more money because the price of electricity is determined by how much electricity is produced by gas-fired power plants. This is the most expensive way to generate power; alternative energy sources are far less expensive, but because the cost of all forms of electricity is the same, these generators are making much higher profits.


The UK can hopefully resume its normal course with the Chancellor's plan, despite his claim that there is a global energy crisis.


Business energy FAQs about the Autumn announcement

Has this announcement changed the current support my business is getting?

No, the Energy Bill Relief Program now offered to businesses has not changed as a result of this statement. The purpose of the autumn statement was mainly to provide firms with a general notion of what to expect after this support expires in April 2023.


What is going to happen after the price cap?

What businesses can anticipate after the energy support ceases hasn't been described in great detail as of yet. After April, the government has stated that assistance for vulnerable industries will continue.


Should I be fixing my energy prices?

It depends on your company, but for the vast majority of enterprises, this will likely be the most economically sound choice in terms of your energy costs.


You will have complete assistance under a fixed contract because your wholesale gas and electricity rates will be limited. The cap will be set at 7.5 p/kWh for gas and 21.1 p/kWh for electricity.


However, you will only be eligible for a maximum discount on the wholesale portion of your energy bills if you are on presumed, variable, or out-of-contract rates. For electricity, this will be capped at 34.5p/kWh, and for gas, it will be 9.1p/kWh. This indicates that the lowest price you could get for power, if it were priced at 120p/kWh for wholesale expenses, would be 85.5p/kWh.


You will pay far more than those with fixed rates because of the considerable volatility of wholesale costs. As a result, there is no genuine advantage to continuing to pay considered business rates.


How can I reduce my business energy bills?

If you are on a fixed rate contract, you can cut your business's energy costs by one. Through our energy reduction solutions, you can also lower your energy costs.


What rates should I be paying for my business energy?

This is dependent upon your industry and the kind of energy contract you have. Please get in contact with us here if you'd like to talk to one of our energy specialists about your particular energy rates.


Other investments in the energy sector

Size well C nuclear plant.

The Sizewell C nuclear power plant's intentions have also been revealed by Jeremy Hunt. According to Hunt, achieving energy independence and efficiency is the only long-term solution to the nation's dependence on foreign gas pricing.


This is why the Sizewell C nuclear power plant in Suffolk, which will get a £700 million investment, will be the first state-backed nuclear power plant in nearly 30 years.


Hunt will oversee the signing of the contracts for the power plant that would supply energy to up to 6 million homes. The UK's move to energy independence and net zero will benefit greatly from the construction of this new power station. However, a lot of people have been fighting to block this since it will raise taxpayer rates and take a while to start producing electricity for the UK's power system.


Funding from 2025 for a further £6bn in energy efficiency

Despite a larger price increase for homes, the government has stated that a project to update boilers and insulate homes will receive an additional £6 billion. People can lower their energy costs by doing this. The government hopes to be able to reduce building energy use by 15%.


According to Labour, consumers could save up to £11 billion in energy costs over the course of three years if the government could ensure that every property was adequately insulated.


Additionally, there will be additional energy assistance for lower-income families, retirees, and those with disabilities.


Why not get in contact with us right now if you want to reduce the cost of your energy bills? Our energy experts are able to find your firm the best business energy rates available at the exact moment you need them because to the connections The Smart Energy Company has established with over 24 of the largest business energy suppliers in the UK. Start saving money on your energy by requesting a free quote right away.

 

0151 459 3388


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