The government has strengthened its financial support for large manufacturers struggling with energy costs, such as steel and paper mills, amid ongoing calls to support smaller manufacturers.
In response to rising industrial energy costs, the government has confirmed that it will be doubling the budget of its Energy Intensive Industries (EII) compensation scheme and extending it to 2025.
The scheme is designed to provide relief on certain indirect costs in electricity bills for large businesses in energy intensive sectors, recognising that industrial electricity prices are higher in the UK than other countries. However, eligibility is restricted to only very large energy users.
The announcement has been widely welcomed by business groups, who said it will have a positive impact on UK supply chains. Tom Thackray, Programme Director for Decarbonisation at the CBI, said:
“This move will provide some relief to energy intensive firms which play a key role in the UK’s critical supply chains. Rising energy prices continue to weigh heavily on firms’ cashflow and production volumes, which are facing higher costs compared with their international counterparts. This compensation will go some way to closing that gap.”
The government also said it is considering further measures to support high energy users, the details of which will be announced in the coming weeks.
To date, no new energy-related support has been introduced for businesses falling outside the scope of the EII scheme.
In January, the UK’s five largest business groups – the British Chambers of Commerce, the CBI, the FSB, the IoD and Make UK – asked the Chancellor for urgent support to help businesses manage rising energy costs, pointing out that SMEs were most at risk.
Commenting on the issue in April, FSB National Chair, Martin McTague, said:
“At one end of the energy market you have big corporates using their clout to get the best deals and, at the other, households which are receiving support. In the middle, you have small firms, which are being well and truly left out in the cold…We’re encouraging all firms to check what support is out there, including at the local level.”
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