Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Accepted
Inconsistent sector inclusion in energy support schemes raises questions about criteria and understanding.
Conclusion
In April 2023, the government will replace the Energy Bill Relief Scheme with the Energy Bill Discount Scheme. This will support businesses for 12 months from April 2023 by providing a discount on their energy bills if wholesale prices are above a certain threshold. Businesses in certain Energy and Trade-Intensive sectors will receive a higher level of support, based on the government’s standard industrial classification of sectors.45 The majority of these sectors are in manufacturing industry but also include libraries, museums and zoos. We therefore asked why these sectors had been included as part of the new schemes, while restaurants and pubs had been excluded. The Department explained that the sector which included libraries and museums also included “highly traded” sectors, but recognised that any scheme which used an approach based on large categories would “end up with a mix of those who are really deserving and those who are less deserving”.46 We were concerned that this approach might not fully take account of variations in the make up of different sectors. The Department told us that while it had teams working specifically on some sectors, such as pubs and hospitality, it accepted that it did not, because of the number of sectors in the economy, understand every one of them well. It explained that, ultimately, decisions about the methodology for the new scheme and which sectors had been classified as trade intensive, were decided by Treasury Ministers. HM Treasury told us that its decisions on which sectors to support were partly based on whether the sector was competing globally, such as steel and concrete, and that the sector which included libraries and museums also included internationally traded antiquarian and other booksellers.47
Government Response Summary
The government, perceiving an implicit recommendation, states it agrees and has implemented it. It outlines that HM Treasury carefully considers tax system impacts, DESNZ will publish monthly EBDS discount scales, and an evaluation of energy support schemes is being commissioned, with findings due by summer 2025.
Government Response
Accepted
HM Government
Accepted
4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 When keeping the tax system and reliefs under review, HM Treasury takes into account cost, wider pressures on that sector and how taxes affect the broader economy. HM Treasury carefully considers the impact that a relief will have on different industries and engages with a wide range of stakeholders to inform this analysis. The government does consider the impact of the overall tax burden – including business rates – on different sectors and did so for changes in March 2023. 4.3 The government introduced the Energy Bill Discount Scheme (EBDS) from April 2023 to ensure eligible businesses with will receive a discount on their bills for a further 12 months following the end of the EBRS. To design the EBDS, the Department of Business, Energy & Industrial Strategy (BEIS) developed a framework to assess which sectors may be most affected by rising energy prices. 4.4 HM Treasury has provided further detail of the analysis performed to aid decisions on tax and energy measures in a letter to the Committee sent alongside the publication of this Treasury Minute. 4.5 The Department for Energy Security and Net Zero will publish the scale of the discounts provided under the EBDS, including to Energy and Trade Intensive Industries (ETIIs), on Gov.uk on a monthly basis. The department is commissioning an evaluation of the energy support given to organisations under the EBRS and EBDS, including ETIIs. This involves research with ETIIs on their awareness, experiences, perceptions and the support that they have received. The overall effectiveness of delivery, impact and value for money of the schemes will be assessed. The evaluation is expected to run until summer 2025 and the findings will be shared with the Committee when available.