Energy bill discount scheme: More uncertainty and less support leaves the sector vulnerable
Since October last year, the Government has provided relief on rapidly rising energy costs for businesses including charities through the Energy Bill Relief Scheme (EBRS). This support has been vital, but earlier this month the Treasury chose to ignore our calls for further assistanceand announced it will be significantly reducing the level of support from April onwards, in a move that marks yet more uncertainty for the homelessness sector.
The new Energy Bill Discount Scheme (EBDS), which will replace the previous scheme from April, offers a universal and vastly reduced level of support to all non-domestic users who renewed their contracts after December 2021. Announcing the scheme, Chancellor Jeremy Hunt cited wholesale prices returning to February 2022 levels, prior to Putin’s invasion of Ukraine. But while the drop in wholesale prices offers some welcome relief for the economy, energy is still three to four times more expensive than when prices first began to spiral in June 2021. At current, wholesale prices are well below the threshold at which discounts are applied. So, while we can expect lower prices than those seen this summer, bills are likely to remain high with deductions only taking effect if they inflate steeply once again.
No action will be required by organisations to access the amended scheme, as the discount is automatically applied once prices rise above a certain threshold. However, this threshold is significantly higher than under the existing EBRS which had already seen services paying 50% more for their energy than in 2021. Nor does the new scheme account for costs caused by additional charges, highlighted by Care England as including “heavily inflated standing charges, on-costs and risk premia” which drive contract amounts well beyond what is manageable for charities and not-for-profit organisations.
While any support is welcome, the decision to pool homelessness services and other support providers in with general businesses doesn’t reflect the largely residential use of energy in the sector. We use energy to heat homes, cook meals and deliver essential support in warm, welcoming spaces. Reducing costs would mean compromising standards in the care of people who turn to us for support. Unlike profit-making businesses, we cannot compensate for increased costs by raising prices or attracting new customers. Instead, services are expected to shoulder increased costs from their already overstretched budgets. We have highlighted previously that there was a real-terms cut to funding announced in the Autumn Statement. This decision will inevitably force some providers out of business and, in turn, leave more people living on our streets and unable to access support.
As businesses of all kinds are expected to adjust to inflated prices, it is clear that our sector requires more funding and support if we are to avoid devastating closures. We will continue to work closely with our members and other similar organisations to communicate our needs to Government and push for proper resources to avoid a crisis.
If you would like to add your voice to our Keep Our Doors Open campaign, or if your organisation has been particularly impacted by rising costs, please get in touch with the details below or take a look at our campaign page.
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