What is the Autumn Statement
Yesterday Jeremy Hunt finally announced his Autumn statement. This included his plans to help businesses through the next year, as well as changes in the energy sector.
Jeremy Hunt became chancellor in October 2022 with the job to fix the disastrous Mini budget Kwasi Kwarteng had set out.
Whilst he has already reversed most of the announcements made by Kwarteng in the mini budget, this Autumn statement is the first proper announcement made by the new chancellor.
The chancellor set out his £55 billion package with 13 billion going to business rates support for companies. The 14bn support set out will support businesses and ensure they don’t have to pay out too much next year.
This support will ensure that businesses will get government-funded transitional relief for next year.
The chancellor has ensured that the vulnerable sectors such as hospitality will receive targeted energy support, continuing after April 2023. Hunt has said further details will be announced for what this support will entail.
Not only did Hunt speak out on business energy support, but he also announced what his plans are for domestic energy support. Energy bills for domestic customers are set to rise from April 2023 to £3,000 from the current £2,500 guaranteed average.
Hunt said although this rise will impact households, it would have been rising to £4,000 a year on average without government support.
Windfall taxes will help to pay for energy support
Energy companies and generators will be hit with an expanded windfall tax to help pay for energy support. This will raise an additional £14 bn next year. The tax is currently 25%, this will now rise to 35%.
Jeremy Hunt said he had no objection to windfall taxes as long as they were genuinely on windfall profits caused by an increase in global energy prices.
Electricity generators will also receive a 45% tax on profits. This is due to them receiving higher profits as electricity is priced based on electricity generated from gas-fired power stations. This is the most expensive electricity generation method; renewable methods are much cheaper to generate but as all electricity is priced the same these generators are seeing much bigger profits.
Chancellor has said there is a global energy crisis but with his plan, the UK can hopefully get back on track.
Business energy FAQs about the Autumn announcement
Has this announcement changed the current support my business is getting?
No, this announcement has not made any changes to the current Energy Bill Relief scheme that is available currently for businesses. The Autumn announcement was more to give some idea of what businesses can expect after this support comes to an end in April 2023.
What is going to happen after the price cap?
As of now, not much detail has been given for what businesses can expect after the energy support ends. The government has said that support will continue for vulnerable sectors after April.
Should I be fixing my energy prices?
This does depend on your business, but for the majority of businesses, this is probably going to be the most cost-effective decision when it comes to your energy bills.
On a fixed contract you will receive full support as your wholesale gas and electricity prices will be capped. The cap will be set at 21.1 p/kWh for electricity and 7.5 p/kWh for gas.
However, if you are on deemed, variable or out of contract rates you will only receive a maximum discount on the wholesale element of your energy bills. This will be capped at 34.5p/kWh for electricity and 9.1p/kWh for gas. This means that if electricity was priced at 90p/kWh for wholesale costs, the cheapest price you could get would be 55.5p/kWh.
Due to the high volatility of wholesale prices, you will be paying a lot more than those on fixed rates. Therefore, there is no real benefit of staying on deemed business rates.
How can I reduce my business energy bills?
You can reduce your business energy bills by one making sure you are on a fixed rate contract. Another way you can reduce energy bills is through our energy reduction solutions.
See more here.
What rates should I be paying for my business energy?
This depends on your business and what type of energy contract you are on. If you would like to speak to one of our energy experts on your specific energy rates, then please get in touch here.
Other investments in the energy sector
Size well C nuclear plant.
Jeremy Hunt has also announced plans for the Sizewell C nuclear power plant. Hunt has said over the long term the only way the country is going to stop being subjected to international gas prices is through energy independence and energy efficiency.
This is why the Sizewell C in Suffolk is going to be the first state backed nuclear power station for nearly 30 years with a £700 million investment.
Hunt, is going to be ensuring contracts are signed for the power plant that will power up to 6 million homes. This new power plant will be a huge step for the UK’s transition to energy independence and net zero. However, many people have been campaigning to get this stopped as it is going to drive up prices for taxpayers and take a long time to start generating energy for the UK’s power system.
Funding from 2025 for a further £6bn in energy efficiency
Although homes are seeing a higher price rise, the government has announced that another £6bn will go towards an initiative to insulate homes and upgrade boilers. By doing this people can cut their energy bills. The government plan to be able to reduce the energy consumption of buildings by 15%.
Labour has said that if the government could ensure all homes were insulated it could save people up to £11bn in energy bills in three years.
As well as this there will also be further help with energy help for poorer households, pensioners, and those with disabilities.
If you're looking to save money on your energy bills then why not get in touch today? The relationships Resolve Energy has developed with over 24 of the UK’s biggest business energy suppliers allows our energy experts to source the best business energy rates available for your company right when you need them. Request a free quote today and start saving money on your energy.