Car retailers’ energy support could halve after March

Car retailers are braced for a potential halving of Government support on their energy bills from the end of March.

Chancellor of the Exchequer Jeremy Hunt will address the House of Commons had been expected to adddess ministers on his plans for support today (January 9) with the next phase of its Energy Bill Relief Scheme expected to run until the end of March 2024.

But a failure to clarify the plan has added to growing concerns of deep cuts.

Business leaders have already been told to expect significantly reduced levels of Government support, which Hunt stating at a meeting last week: “No government can permanently shield businesses from this energy price shock.”

The BBC reported that Government help would halve following last Wednesday’s business briefing, which saw Government address industry bodies including the CBI, the Federation of Small Businesses (FSB), UK Hospitality and the Institute of Directors and the British Chambers of Commerce (BCC).

The Office for Budget Responsibility (OBR) estimated the cost of the support scheme for business at nearly £20 billion for the six months to March 2023.

Hunt told the groups that any renewed support would be at a "lower level" to protect the public finances.

In a statement after last Wednesday’s meeting, government officials said: “Extending the scheme at current levels could cost tens of billions of pounds, with costs potentially doubling or tripling if international energy prices increase further than expected. It is vital that taxpayer’s exposure to volatile international energy prices is reduced.

“However, the chancellor also heard the concerns of the business community who are facing high energy prices, and explained that any future support, while at a lower level, would be designed to help them transition to the new higher-price environment and avoid a cliff edge in support.”

Falling wholesale gas prices have raised hopes that efforts to cut energy bills may not prove as costly as first feared in recent days.

Forecasts from Cornwall Insight show energy bills for a typical household will be around £2,800 from July onwards, which is £200 below the capped EPG rate of £3,000 but £300 above the current capped EPG rate of £2,500.

As early as November 2021 and AM news insight feature reported that soaring energy prices would compel car dealers to switch off the showroom lights.

Last summer Journey energy solutions Darren Riva later asserting that the only way for businesses to isolate themselves from soaring costs being to go “off grid”.

By September franchised car retailers revealed that they may be forced to set aside manufacturer standards and don jumpers and jackets in showrooms to mitigate against the impact of soaring energy costs.

Speaking ahead of today’s House of Commons announcement by the Chancellor, British Chambers of Commerce director general Shevaun Haviland said: “More than a third of firms have told us they are finding it difficult to pay their energy bills even when they are in receipt of government support.

“Any continued help is welcome, but it is now clear the new plan will be at a lower level than the existing one. That’s unsurprising, given the state of public finances, but this will still have a significant impact on many businesses.”