Business support scheme cost £12.5bn less than estimated
Published 20 April 2023
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The government’s winter energy support scheme for business has cost a third of the amount the Treasury estimated it would do, new official statistics show.
According to payments data, published on the Department for Energy Security and Net Zero’s website, suppliers received £5.9 billion for the Energy Bills Relief Scheme (EBRS).
The figures cover the full six months of the EBRS, which closed at the beginning of April. Suppliers were paid £4.6 billion and £1.3 billion to cover customers’ electricity and gas bills respectively.
In last November’s autumn statement, the Treasury forecast that the EBRS would cost the Exchequer £18.4 billion, around three times the sum that this week’s figures show was actually paid out.
The EBRS has subsequently been replaced for most businesses by the much less generous Energy Bills Discount Scheme (EBDS). The Treasury has estimated that the EBDS will cushion non-domestic customers to the tune of £5.5 billion over the next year. Fears about the sums, which the government was potentially on the hook under the EBRS, led to the introduction of the EBDS.
Martin Young, energy analyst at asset manager Investec, told Utility Week that endeavouring to estimate the level of business support was “always going to be a challenge” due to the greater complexities surrounding such non-domestic accounts.
He said that factors taken into account included the level of consumption and the mix between fixed and variable tariffs. Other complicating factors included when those fixed tariffs were taken out and the level of wholesale prices for variable tariffs.
The EBRS, which was announced in September during Liz Truss’ short tenure as prime minister, provided six months of energy costs support for non-domestic customers.
The scheme provided a discount in p/kWh on wholesale gas and electricity prices for all qualifying non-domestic consumers, including businesses, the voluntary and public sectors.
The aim of the scheme was to deliver support for non-domestic customers in line with the Energy Price Guarantee, which capped average household bills at £2,500 per annum.
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