Business Update

Department for Energy Security and Net Zero written statement – made on 27th March 2023.

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Photo of Grant Shapps Grant Shapps The Secretary of State for Energy Security and Net Zero

The Government provided an unprecedented package of support for non-domestic users through the winter in the shape of the Energy Bill Relief Scheme (EBRS), with a total amount of support of £7.3bn, shielding businesses and saving some around half of their wholesale energy cost. The Government has taken difficult but right and considered decisions when necessary, following an unprecedented rise in energy prices, to support our essential British businesses and public sector services.

The Government has been clear that such levels of support were time-limited and intended as a bridge to allow business to adapt. The latest data shows wholesale gas prices have fallen to levels before Putin’s invasion of Ukraine and have significantly decreased since the EBRS was announced. The Energy Bill Discount Scheme (EBDS), announced on 9 January and which comes into force on the 26 April, with support backdated to the start of April, strikes a balance between supporting businesses between 1 April 2023 and 31 March 2024 and limiting taxpayer’s exposure to volatile energy markets. The scheme provides long term certainty for businesses and reflects how the scale of the challenge has changed since September last year.

The EBDS will provide all eligible businesses and other non-domestic energy customers with a discount on high gas and electricity bills until 31 March 2024, following the end of the EBRS. It will also provide businesses in sectors with particularly high levels of energy use and trade intensity with a higher level of support as they are less able to pass these higher costs on to customers due to international competition. The price reduction will be linked to the wholesale element of a non-domestic customer’s gas and electricity bill and Government will reimburse suppliers in accordance with the scheme.

Further support will be available to domestic end users on heat networks, who fall under the EBDS due to the heat network operators having commercial energy contracts, to ensure they do not face disproportionately higher energy bills than consumers under the EPG from April 2023.

The EBDS will be established under powers conferred by the Energy Prices Act 2022 and government intends to pass enabling legislation. Subject to the will of Parliament, it is intended to run for 1 year and cover energy consumed from 1 April 2023 until 31 March 2024.

Funding for the EBDS will be sought through the Estimates process. Any future costs for the delivery of the EBDS can only be projections and will depend upon energy usage levels and changes to the wholesale price of energy. As a result, the EBDS will give rise to a contingent liability.

I have laid before Parliament a Departmental Minute describing contingent liabilities arising from the Energy Bill Discount Scheme (EBDS). It is normal practice when a Government Department proposes to undertake a contingent liability of £300,000 and above, for which there is no specific statutory authority, for the Department concerned to present Parliament with a minute giving particulars of the liability created and explaining the circumstances. If the liability is called, provision for any payment will be sought through the normal Supply procedure.

I regret that due to the urgency of this scheme, I have not been able to follow the usual timelines for issuing notice at least 14 parliamentary sitting days before the liability begins to be incurred.

The Treasury has approved this proposal. If, during the period of 10 parliamentary sitting days beginning on the date on which this Minute was laid before parliament, a member signifies an objection by giving notice of a Parliamentary Question or by otherwise raising the matter in parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.