OFGEM RAISES ENERGY PRICE CAP

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Average household energy bills will rise to £3,549 in October following the decision of energy regulator Ofgem to raise the price cap.

The record 80% hike will see a typical default tariff customer paying an extra £1,578. The rise follows a 54% increase in April, which saw average bills surge to £1,971 a year.

Ofgem Chief Executive, Jonathan Brearley, said:

‘We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make. I talk to customers regularly and I know that today’s news will be very worrying for many.

‘The government support package is delivering help right now, but it’s clear the new Prime Minister will need to act further to tackle the impact of the price rises that are coming in October and next year.

‘We are working with ministers, consumer groups and industry on a set of options for the incoming Prime Minister that will require urgent action.’

RECOVERY LOAN SCHEME TO BE RELAUNCHED

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The Recovery Loan Scheme (RLS) will be relaunched during August 2022 as the government aims to continue supporting recovering small businesses.

The RLS launched in April 2021 and was originally scheduled to run until 31 December 2021.

At Autumn Budget 2021, the government extended the scheme by six months to 30 June 2022 and made some adjustments to its terms. The government provided a guarantee of 80% for loans made before 1 January 2022 and 70% for loans after that date. The borrower remains 100% liable for the debt.

According to the British Business Bank, accredited lenders have offered over £4.5 billion, through the RLS, to smaller UK businesses as they steer a path towards a sustainable recovery.

The relaunched RLS will support facility sizes of up to £2 million for borrowers outside the scope of the Northern Ireland Protocol, and up to £1 million for those in scope of the Northern Ireland Protocol.

The scheme will be open to smaller businesses with a turnover of up to £45 million.

Catherine Lewis La Torre, CEO, British Business Bank, said:

‘The British Business Bank is committed to supporting smaller businesses in accessing the finance they need to grow sustainably. Thousands of businesses in all sectors and from right across the UK have taken out loans under the RLS. This will better position them to confront both the challenges and opportunities that are ahead.’

Internet link: British Business Bank website

IOD CALLS FOR EXTENSION OF CAPITAL ALLOWANCES SUPER-DEDUCTION

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he Institute of Directors (IoD) has called on the government to extend the capital allowances super-deduction.

Data published by the IoD found that the super-deduction has had ‘a positive and measurable impact’ since it was introduced at Budget 2021. The data showed that 13% of firms reported that the super-deduction had had a direct impact on their level of investment undertaken between 2021and 2023. For half of these businesses, it was entirely new investment as a direct result of the super-deduction.

Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from new first year capital allowances.

Under this measure a company will be allowed to claim:

  • a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances
  • a first year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances.

The relief is not available for unincorporated businesses.

The business group is urging the government to make the super-deduction permanent.

Kitty Ussher, Chief Economist at the IoD, said:

‘Our data shows the positive impact the super-deduction has already had in doing just that. We are therefore calling for the Chancellor to make it a permanent feature of doing business in Britain.

‘It is wrong to look at declining overall levels of business investment in recent months and conclude that the super-deduction has not worked. Instead, our data shows that even less investment would have taken place if the super-deduction did not exist.’

Internet link: IoD website