RIP EBRS. The EBRS is dead. Long live EBDS?

And so it ends. Well, almost. The old Energy Bill Relief Scheme (EBRS) ends (or ended, depending on when you’re reading this article) in March 2023 and a new and far less generous scheme comes into force.

Under the new Energy Bills Discount Scheme (EBDS), the government will provide a fund capped at £5.5bn to support industry’s energy costs. But as many readers will know, the new rates are dramatically lower for most business – down from discounts of between 25% and 50%, to just 2% for electricity and 0.7% for gas.

The good news is that companies classified as being in the ‘Energy and Trade Intensity Industry’ (ETTII) will receive additional support through higher discounts and lower threshold limits. Even here, however, it is something of a lottery. ETTII companies are defined by the SIC code under which their business is registered at Companies House; if this registration is incorrect then the business may not qualify.

Although the new scheme only runs for twelve months it does provide industry with a degree of certainty – at least for a while, we now know where we stand. But it does little to help the longer-term viability of manufacturing businesses, which are battling on multiple fronts to maintain operating margins: energy costs, general inflation, Brexit, supply chain disruption and recruitment, to name just a few.

To be fair to the Government it has taken radical measures to provide the manufacturing sector with support in the face of highly volatile energy prices. Many industry groups would argue that, helpful as it is, the EBRS and EBDS measures are too little, too late and, in common with most government initiatives in recent years, piecemeal. As Stephen Phipson, Chief Executive of Make UK, was quoted as saying in the Financial Times {the EBRS has} “been a sticking plaster and making it less generous will make the situation worse for many companies.”

Many of the fundamental issues that have beset economic growth in the UK for the last decade or more have yet to be addressed effectively – if at all. For example, there is no clear industrial strategy, no long-term planning to develop the skills and knowledge that manufacturers are desperate for, no clear mechanisms to drive investment or innovation, and, to return to the subject of the energy crisis, there has until recently been a lack of strategic thinking to create energy security across the UK.

The Energy Security Strategy published in April 2022 was long overdue and is an important start if we’re to overcome future crises, of which the current spike in energy prices is likely to be just the first.

In many respects, governments of all colours have neglected this issue. The wealth of North Sea oil and gas has largely been squandered over the years; unlike Norway, for example, we failed to create a sovereign wealth fund, which is currently worth around $1.2 trillion. Although the UK has led the way in offshore wind energy, there has been continual indecision over onshore wind power and the construction of nuclear power plants – remember Boris Johnson’s claim when Prime Minister that we’d be building at a rate of one a year? Neither do we have integrated long-term policies to improve energy efficiency in industrial processes or in commercial and residential buildings.

Nobody realistically expects government to bail out industry with subsidies or energy discounts. The fact that they have done so in the face of a short-term emergency is to their credit.

However, what manufacturers need is not hand-outs, but stability, consistency and certainty to create an environment within which they can plan and invest for the long-term, building resilience to market and economic turmoil while continuing to grow and prosper. Achieving this requires more than reactionary politics.