I take this issue very seriously and I know the Secretary of State has been closely engaged with suppliers to explore ways to support the industry. On 21 September, the Secretary of State spoke with nearly 40 smaller suppliers in the market after meeting with bigger suppliers on the previous day. He also provided an update to Parliament, responded to an Urgent Question, and provided evidence on the situation to the Business, Energy and Industrial Strategy Select Committee.
I welcome that the extensive engagement continues across government at both a ministerial and official level on this situation to understand, and to help mitigate the impacts of this issue. The Government’s priority is to ensure costs are managed and energy supplies maintained.
This is not an issue of supply – the United Kingdom benefits from having a diverse range of gas supply sources with capacity that can more than meet demand and no one should expect supply emergencies to occur this winter.
I realise that these high prices might have significant implications for many businesses. Ofgem, the independent energy market regulator, has robust policy in place to protect commercial customers. If a business’ energy supplier fails, Ofgem’s safety net will ensure continuity of supply and identify a suitable new supplier through a competitive process. A business will then be able to view different tariffs before committing to a new contract. A business on a longer term contract may have little exposure to the current high wholesale prices, however, companies without longer-term contracts may face higher costs.
Ofgem advises companies to compare suppliers to find the most competitive prices. Ofgem makes several other recommendations for companies facing energy price issues, such as contacting their supplier to agree a payment plan and to check for business finance schemes from suppliers, the Government or local authorities.
I am also not aware of any plans for an energy tax relief. However, I have passed the comments raised on this issue on to colleagues at the Treasury so that they are aware of the strength of feeling on this issue. Any decision to modify our tax regime is a matter for the Treasury and careful consideration will be given to any proposed amendments to taxation. I understand that the Government keeps all taxes under review, and that any changes to taxation will be announced in the next Budget. I shall be following the developments on this issue closely, and I will ensure my colleagues at the Treasury are aware of the strength of feeling on this issue.
Charities and non-profit organisations are entitled to a VAT reduction of 15 per cent on energy used for non-business purposes, as well as exemption from the Climate Change Levy which also reduces bills by 5 per cent.
Finally, I appreciate that many would like to see a commercial energy price cap introduced to support businesses in the face of high prices, however I am unaware of any plans to do this.