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The RHA has slammed the government’s decision to cut support to businesses through the Energy Bill Relief Scheme (EBRS) which it says will hit hauliers hard.

The criticism follows Chancellor Jeremy Hunt’s announcement yesterday (9 January) that the government’s energy bills support for all businesses will be cut from March onward.

The new package will see £5.5bn spent on support for non-domestic customers over the next year, down from the £18bn committed through the current scheme.

The RHA said that for struggling firms who have seen their energy bills skyrocket the current scheme provides certainty and for many has made a difference. It added: “This new scheme will do neither.”

The new scheme means that from 1 April 2023 to 31 March 2024, eligible businesses will see a unit discount of up to £6.97/MWh automatically applied to their gas bill and a unit discount of up to £19.61/MWh applied to their electricity bill.

In November 2022, the RHA surveyed its members on the impact of the energy price crisis to feed into the government’s review of the scheme.

Nearly half of those responding reported that their bills, compared to last year, have increased by between 300% and 400% with the remainder reporting average increases of 130%.

The RHA said that the majority of these costs come from warehousing and storage, where it said efficiencies have already been fully exploited through more efficient lighting and heating and timing switches.

It emphasised that the amount of energy consumed in these activities will not reduce in line with reduced economic activity.

The RHA warned that these increased costs for hauliers will ultimately impact on consumers: It said: “The most common response of transport businesses was to raise prices. Hauliers have increased their prices by an average of 5-10% over the past year. This demonstrates the link between energy bills and the high levels of consumer inflation that we see at the moment.”

It added that RHA members report that while they may have been able to raise prices, the vast majority have not been able to raise them sufficiently to pass on the energy price increases in full.

Richard Smith, RHA MD, added: “As we saw during the pandemic the transport sector is essential to keeping the UK economy moving. It is critical to the country’s supply chains transporting 89% of all goods moved by land in the UK, including 98% of food, agricultural and consumer products.

“Many operators may not be able to survive on the insignificant support through the new version of the scheme. Two pence off a kWh of electricity and half a pence off gas is totally insignificant for small businesses.”

The Cold Chain Federation is urging government to ensure all cold storage operators can qualify for enhanced support when energy bill relief is slashed at the end of March 2023.

Cold Chain Federation policy director Tom Southall said: “The new scheme is a completely different design, offering a fixed discount on the wholesale energy price above a minimum threshold rather than setting a maximum price for electricity and gas. The EBDS only applies to the wholesale energy price element of your tariff. From April 2023 the discount will provide significantly less support than the current scheme.

“Keeping food safe through cold storage and distribution requires significant energy and the Energy Bill Relief Scheme has been vital for many in our industry, but this crucial lifeline is set to be slashed just as the weather starts to warm up and our energy need increases. The new scheme will leave businesses across the food supply chain at the mercy of a volatile market, and exorbitant energy bills throughout the food chain ultimately result in higher prices for consumers. The government is gambling on wholesale rates remaining lower than they were in 2022, and that this will filter through to business energy tariffs.

“The nation relies on the cold chain’s service every single day of the year, and we believe it is illogical that not all cold storage operators qualify for the enhanced support. We are seeking urgent clarifications on who exactly is eligible and making a strong case to Ministers and officials for all cold storage operators to qualify.”