Bracing for a bleak winter

While there is rightly much concern about how households will manage to pay colossal energy bills, the issue is even more acute for businesses, which do not have the protection - although I'm not sure how much 'protection' is being provided these days - of a price cap. At the sharp end this, the UK's highest heaviest power users, which include businesses from steelmakers and chemical firms to glass and ceramics manufacturers, account for aound 16% of the country's energy usage, behind transport and domestic use. Not only are they facing bills that seemed unimaginable this time last year, but there is also the possibility that energy-intensive businesses will have to close to preserve power for hospitals, emergency services and households if a cold snap combines with gas shortages to trigger blackouts, bringing back dark memories of the 1970s.

While the government has said it is considering plans to subsidise bills for energy-intensive industries, the measure would only help around 300 businesses - and let's face it, every business could do with some help at the moment, particularly as three and five year contracts at significantly lower price points come to an end, leaving a 'cliff-edge' situation. Current and anticipated circumstances make it hard to see how many businesses will avoid having to shut permanently.

There are ways to help mitigate the situation. Many manufacturers already run their facilities during the night to take advantage of cheaper tariffs (this does, however, increase wage bills with employees being paid extra to work unsociable hours), and there is a huge range of energy saving technology that can be employed - but after years of suppressed demand due to the pandemic and rapidly rising interest rates, how many business can afford to invest at the moment? Besides which, the increases in energy costs are so severe, it's hard to imagine that any technology changes are going to offset them.

Whatever happens, it is vitally important that the government comes up with a radical plan to curb energy costs of UK businesses.  Industry body, UK Steel, has estimated British producers pay 61% more for electricity than their competitors in Germany and 51% more than in France - underlining the competitive disadvantage to UK companies. Of course, not all the factors can be controlled by government intervention, but at the moment it certainly seems that a whole lot more needs to be done, and done without delay.