Energy Plan Offers Little Comfort to Businesses Amid Rising Costs

An expert has expressed concern that Labour's energy cost plan provides minimal relief to British businesses struggling with escalating expenses, particularly due to tax increases. Steven Mulholland, the Chief Executive of the Construction Plant-hire Association, stated that companies are facing significant challenges, despite government efforts to reduce energy costs.

The proposed British Industrial Competitiveness Scheme, set to begin in 2027, aims to lower electricity costs by up to £40 per megawatt hour for over 7,000 energy-intensive businesses in manufacturing sectors such as automotive, aerospace, and chemicals. However, Mulholland noted that the delayed implementation offers little solace to the numerous construction SMEs already burdened by a National Insurance hike and facing potentially damaging changes to various tax reliefs.

Mulholland further highlighted that the proposed changes to Business Property Relief could jeopardize the very businesses crucial to Britain's construction sector, potentially leading to a £15 billion loss in economic activity. He emphasized that for many family-owned firms with substantial assets but limited cash flow, these changes could force them to sell assets simply to cover their tax obligations. He stressed the importance of supporting the construction SMEs, which constitute 90% of the sector and are vital for delivering essential infrastructure.

The government has also announced exemptions from certain levies for firms supporting over 300,000 skilled jobs. Eligibility details for these exemptions will be determined following consultations. Furthermore, the government is increasing support for energy-intensive firms, such as those in the steel, chemicals, and glass industries, by covering a larger portion of their electricity network charges through the British Industry Supercharger. This will increase the discount on these charges from 60% to 90% starting in 2026, aiming to reduce costs, protect jobs, and encourage investment.