25 Feb 2024

Chancellor needs to “go further” on energy support

The new energy support scheme for businesses, unveiled ahead of the closure of the existing scheme in March, will not do enough to support the automotive sector the government has been warned, with new figures showing that increasing energy bills are seen by 90% of garages as one of the biggest challenges for 2023.

The new scheme will provide a discount on business energy bills until 31 March 2024.
Chancellor of the Exchequer Jeremy Hunt said: “Wholesale energy prices are falling and have now gone back to levels just before Putin’s invasion of Ukraine, but to provide reassurance against the risk of prices rising again we are launching the new Energy Bills Discount Scheme, giving businesses the certainty they need to plan ahead.”

From 1 April 2023 to 31 March 2024, businesses will receive an automatic gas unit discount of up to £6.97/MWh and a electricity unit discount of up to £19.61/MWh, unless their bills are below the threshold.

A higher level of support is being offered to businesses in sectors the government considers to be energy and trade intensive, but this does not include any part of the automotive industry.
SMMT Chief Executive Mike Hawes said: “A new energy support scheme to help all businesses next winter is welcome. Energy remains the second largest automotive manufacturing input cost and UK businesses already face the highest electricity costs in Europe. However, automotive will not qualify for the additional higher-level support afforded energy intensive sectors, despite being one of the UK’s largest exporters and trade intensive sectors, and facing energy bills that cripple its competitiveness. The upcoming Budget should go further, therefore, allowing vehicle producers and suppliers to qualify for additional measures in line with energy intensive industries, ensure climate change agreements are maintained and energy efficient capital investments are incentivised.”

Meanwhile, a survey by The Motor Ombudsman has shown that 90% of both independent garages and franchise dealers expect rising costs, taxes and energy bills to be the biggest challenges in 2023. 63% anticipate revenues will fall if motorists put off repairs, with 59% expecting that higher parts prices will exacerbate the problem. 57% assume footfall will drop as a result, with 49% planning to deal with this by not passing on their own higher costs. 31% think overall customer retention will be harder in 2023.

Bill Fennell, Chief Ombudsman and Managing Director of The Motor Ombudsman, said: “Garages and workshops will have to contend with a multitude of challenges this year. At the forefront of these will be navigating a rise in operational costs at a time when many consumers are feeling the strain on their finances, meaning vehicle maintenance and repairs could take a back seat. As the headwinds facing the economy show little sign of abating in the short term, remaining competitive, retaining customers, and finding new revenue channels, will therefore be crucial for businesses in order to deliver a positive bottom line.”