Increased Energy Costs

1. Questions to the First Minister – in the Senedd on 12 July 2022.

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Photo of Hefin David Hefin David Labour

(Translated)

3. What support is the Welsh Government providing to businesses to absorb increased energy costs? OQ58368

Photo of Mark Drakeford Mark Drakeford Labour 2:06, 12 July 2022

Llywydd, I had very deliberately not referred to the Member for Ynys Môn's own plans to be part of a brain drain. So—[Laughter.] Just to be sure; I had made sure that I didn't do that.

Businesses in Wales are facing extremely high energy prices, which, unlike domestic bills, are not capped. The Minister for Economy met with the Wales business council earlier today to discuss these matters. We continue to lobby the UK Government to take further action on both domestic and business energy prices.

Photo of Hefin David Hefin David Labour 2:07, 12 July 2022

I appreciate that answer, First Minister. On 24 June, I visited the Aber Hotel in Abertridwr in my constituency, and they are a family-run local business that has given up three of its rooms to provide a foodbank for the community of Abertridwr. They are a vital business and part of a network and web of businesses across the northern parts of my constituency that provide vital lifestyle and employment to people in that part of the constituency. Just a couple of months ago, they had an increase in energy costs from SSE Energy Supply Limited that hiked what was an average £650 a month electricity bill to more than £4,100 a month. That incredible increase in costs makes it very difficult to sustain family-owned businesses like the Aber Hotel. And we agree that the UK Government needs to take significant steps here. I've been looking at the Welsh Government's Transforming Towns placemaking grants and we are looking to bring those to places like Senghenydd, Abertridwr and Bargoed too. But what more can the Welsh Government do, perhaps in partnership with the UK Government, to support those businesses that are facing these difficult times?

Photo of Mark Drakeford Mark Drakeford Labour 2:08, 12 July 2022

I thank Hefin David for that question. I'm aware of the company that he mentioned and the work that they do. Companies like that, Llywydd, faced with the astonishing rise in energy prices, will be following what is going on in Westminster very carefully and I'm sure that their anxiety will be growing as the contest to reduce the amount of resource available to help companies and the whole of the economy is the only contest that seems to be being conducted. 

What we do here in Wales, Llywydd, is to use the powers that we have; they're not the main powers, they, inevitably, lie with the UK Government. We have specialist resource efficiency advisers working with Business Wales who are working with companies to offer those practical solutions that can help them to mitigate—and it would only be to mitigate, to understand—the impact of energy rises of the sort that Hefin David has mentioned. But they work with companies to reduce vehicle use, to increase water and energy efficiency, to provide insulation and LED lighting, to make sure that there is efficient use of fridges and freezers and so on. The work that we do as a Government also sustains the purchasing power of consumers. One of the most challenging things happening to small businesses of the sort that Hefin David has mentioned is the drawing back by customers of discretionary spend. Faced with bills of their own, people are not buying things in a way that allows those businesses to go on being sustained. Of course we help with other costs as well—more than 85,000 properties in Wales this year will receive help with their business rates. It will cost the Welsh Government £116 million—that's £20 million more than the consequential we receive from the UK Government—in order to be able to do that.

In the longer run, Llywydd, the question that Joyce Watson asked earlier this afternoon has the key: we have to be able to secure renewable energy sources that don't leave us vulnerable to the sort of global shocks that have led to the increase in energy prices, and to be able to do it in a way that offers certainty to small businesses that they won't face this sort of shock to their business model again in the future.

Photo of Natasha Asghar Natasha Asghar Conservative 2:11, 12 July 2022

First Minister, research suggests that nearly two thirds of businesses in the UK spend between 5 per cent and 20 per cent of their total outlay on energy. This represents a significant proportion of their total running costs, meaning that large price rises will have a dramatic effect on their ability to operate at a profit. Small businesses are less well placed to swallow increases in energy costs due to tight margins and restricted cash flow and so are more likely to have to pass these increases on to consumers.

In Scotland, First Minister, Business Energy Scotland provides free and impartial support to help small and medium-sized businesses to save energy, carbon and money. Funded by the Scottish Government, it provides expertise and unsecured interest-free loans to help pay for energy and carbon saving upgrades, as well as offering cashback grants of up to £20,000. First Minister, therefore, will you look at Business Energy Scotland, which claims already to have found over £200 million of savings for Scottish organisations, to see if a similar scheme could and would work here in Wales? Thank you.

Photo of Mark Drakeford Mark Drakeford Labour 2:12, 12 July 2022

Well, Llywydd, I think I said in my last answer that we already have, through Business Wales, which is a Welsh Government-funded source of impartial advice to businesses here in Wales, specialist resource efficiency advisers. They already do the things that the Member has pointed to happening elsewhere. We don't need to reinvent things when we're already doing them. And the availability of interest-free loans and other forms of assistance for businesses that wish to take some of those practical actions that can mitigate the impact of rapidly rising energy costs are part of the landscape here in Wales as well.