FT - James Lowman, chairman, ACS

ACS chief executive James Lowman

The government’s energy support package for businesses has been slammed as  “inadequate, poorly targeted and ultimately pointless” by the Association of Convenience Stores (ACS), as it predicts local shops will disappear in the face of a massive hike in energy costs from April 2023,

The new energy scheme for businesses, charities, and the public sector was confirmed by the government yesterday (January 9), ahead of the current scheme ending in March. The government claims the new scheme will provide a discount on high energy costs to give businesses certainty while limiting taxpayers’ exposure to volatile energy markets; and that businesses in sectors with particularly high levels of energy use and trade intensity will receive a higher level of support.

It said the aim was to help businesses locked into contracts signed before recent substantial falls in the wholesale price manage their costs and provide others with reassurance against the risk of prices rising again.

The ACS says the government is therefore moving away from the current scheme of reducing business energy bills by effectively controlling the wholesale price that is the main component of businesses’ energy bills, and instead providing a subsidy to electricity bills of 1.96p per kilowatt hour for all business customers paying over a minimum rate.

ACS chief executive James Lowman said: “The new package of business support is woefully inadequate. By moving to a subsidy on energy bills, and failing to target specific sectors or those worst affected, the government has spread £5.5bn support over every type of business, the result being a level of subsidy that is ultimately pointless.

“Make no mistake, local shops will go out of business if the government does not rethink its approach before April. Retailers who struck contracts at the peak of the wholesale energy price will still see their bills quadruple even with this meagre support, blowing their commercial model out of the water. Our sector is resilient, plays a vital role in communities, and in fact offers energy bill payment facilities for millions of customers including the most vulnerable. This policy will have very serious consequences for our members and the customers and communities they serve.

“It is not too late for the Chancellor to reconsider the support he is offering, to find practical ways of targeting it more effectively, and to save the businesses who he is effectively consigning to closure with his decision.”