Aberdeen & Grampian Chamber of Commerce has highlighted UK Government support for companies struggling with energy bills may not arrive until November – raising fears it may be too late for many firms.
More details of the business-support scheme are expected next week.
A statement from the chamber said: “A government spokesperson told the BBC the help would be backdated, and cover the period from October 1.
Companies ‘in the dark’
“Last week Prime Minister Liz Truss said firms would get ‘equivalent support’ to the help announced for households whose bills would be capped at £2,500 for two years.
“But companies are still in the dark as to what that actually means for them, including how much support they will get.”
The chamber cited a government spokesperson saying: “We will confirm further details of the business support scheme next week. The scheme will support businesses with their October energy bills, including through backdating if necessary.”
And a “government source” said the precise mechanism and amount of support may not be finalised until November.
Time-limited support
Support for firms will be time-limited to six months with an option to extend support for “vulnerable businesses” – but there has been little indication so far of what that means.
Trade body Scottish Engineering has urged UK ministers to give clarity on the business-support scheme to help stave off closures.
Scottish Engineering (SE) chief executive Paul Sheerin told the BBC: “It’s great to have a broad statement but we need details like how it’s going to work, eligibility and any special conditions. Will some parts of industry be given priority?
“All this is required by companies who’re desperately worried about their industrial energy costs, so they can decide if they can survive.”
Even healthy firms are being forced to the brink of closure, SE warned.
Mr Sheerin added: “One of our members has seen its energy bill rise from £15,000 a month to £80,000 a month. That’s a level which puts its future at risk.
“So they’ve had to talk to their accountants about voluntary liquidation – even though their order book is filled to the middle of 2023.
Alan Soady from the Federation for Small Businesses told the BBC: “All businesses are vulnerable if they are energy users, and let’s face it the problems in the gas market don’t look like they are going away in six months”.
Households benefit from a cap on the unit price for gas and electricity, but there is no such mechanism for businesses.
Many are on the brink and some, like the Royal Crown Chinese takeaway in Torry, Aberdeen, have already shut due to rocketing energy bills.
Firms have a variety of different contracts based on the intensity of their usage, and the mix between gas and electricity.
Many larger companies have their own energy buying departments and systems to insure themselves, or “hedge”, against extreme price movements.
Firms typically have one or two-year fixed contracts, but a significant number – the Confederation of British Industry estimates one-third – traditionally come up for renewal before winter sets in.
It has been reported the total price tag for supporting UK businesses and households through the energy-cost crisis could exceed £150 billion and may even run as high as £200bn – nearly three times what was spent on the pandemic furloughing scheme.
Conversation