It is fair to say that the past two years have been challenging for UK businesses. We are emerging from significant upheaval into even more uncertainty – rising inflation, reduction in government pandemic support and increased energy market volatility.
All of these things are having a major impact on business confidence, with investment decisions being delayed to help mitigate against the increased risk we are all facing.
It is also having a direct impact on business performance. The recent news that leading fertiliser manufacturer, CF Industries, has permanently closed a plant due to high gas costs should sound a warning shot to businesses and government, particularly those companies in energy intensive industries.
That is why it is more important than ever that the voice of business is heard at a time when government is shaping policy around energy independence and net zero.
At Npower Business Solutions (NBS), we have a long track record of telling the business story when it comes to energy. While domestic energy issues grab the headlines, it is vital that the business view is heard too.
We need to ensure that businesses, as well as households, can survive the coming cost of living crisis as energy and other costs rise rapidly. Government support for households is obviously welcome, but support for hard-pressed businesses or public institutions has so far been scant.
That is why, we have conducted a major new piece of insight – the Business Energy Tracker – which has gathered the views of 200 large businesses and includes several in-depth interviews with senior representatives from both public and private organisations.
In it, we asked them about the impact of the energy crunch on their confidence to invest, whether net zero plans are on hold or going ahead, and – importantly – what governmental support businesses would like to see during these challenging times.
The findings show that 77 per cent of organizations say energy is now their biggest business risk and 82 per cent believe the government needs to do more to protect businesses from wholesale market volatility. One in five of these believe government is currently offering no support.
Worryingly, almost half of businesses think that the current energy crisis will harm net zero progress.
This is why it is so important that the views of businesses are taken into account when policy is shaped. Because the investments they make will play a crucial role in the net zero transition and help us all become more energy independent.
However, at the moment, the message coming through loud and clear from this research is that current policy is not doing the job it needs to do to support them at a time when energy is their biggest concern.
That said, businesses are taking a proactive approach to combat the current crisis by increasing their own resiliency. More than half – 55 per cent – say that sustainability measures, such as energy efficiency and energy management, would be their most important investment priority over the next 12 months.
So, what needs to happen?
We need to see strong leadership in government to grasp the nettle of challenging but important change that could radically alter the way industry interacts with energy in Britain. The need for strong carbon border adjustment mechanisms is clear as we continue to move away from fossil fuels, as is the need for far-reaching reform of the rules that govern our wholesale and retail energy markets.
Government and industry must continue to work together to drive forward these changes. The plan is for the Business Energy Tracker to become an annual initiative, so in coming years, as we repeat this exercise, we will see how British industry is responding to the challenges and changes facing their business, and how Britain’s economy and industrial policy is faring on a world stage. We hope British business and policymakers continue to find our insight useful.
At NBS we also recognise our role in helping businesses right now and in the future. That is why we are committed to continued support for both our industrial clients and policymakers to drive the best outcomes for business.
This report is a must read for any business energy user right now and we look forward to hearing your views.
Anthony Ainsworth is chief operating officer at Npower Business Solutions