UK automotive trade body SMMT believes the government needs to “go further” in its upcoming Budget as the new energy support scheme falls short to help the industry, Kallanish reports.

The so-called Energy Bill Discount Scheme, unveiled on 9 January, is available to UK businesses and other non-domestic energy users from 1 April, 2023, to 31 March, 2024. It replaces the current scheme ending in March and provides a discount on high energy costs to give business certainty, the government says.

The scheme set a wholesale price threshold of £99 ($120) per megawatt-hour for gas and £185/MWh for electricity for energy and trade intensive industries. Contracted prices below that won’t be eligible for the discount. The automatic bill reduction will only apply to 70% of energy volumes and will be capped at £40/MWh for gas and £89.1/MWh for electricity.

The wholesale price threshold set for non-domestic users is higher at £107/MWh for gas and £302/MWh for electricity, but the unit discount is lower at up to £6.97/MWh for gas and £19.61/MWh for electricity.

The government defends the subsidies will help businesses locked into contracts signed before recent substantial falls in wholesale prices to manage their costs, while limiting taxpayers’ exposure to volatile energy markets. Gas prices have now fallen to levels pre-war and almost halved since the current scheme was announced, it adds.

SMMT ceo Mike Hawes welcomed the new support, but warned that the automotive industry’s competitiveness is still at risk since benefits from the scheme will be limited.

“Automotive will not qualify for the additional higher-level support afforded energy intensive sectors, despite being one of the UK’s largest exporters and trade intensive sectors, and facing energy bills that cripple its competitiveness,” says Hawes. “The upcoming Budget should go further, therefore, allowing vehicle producers and suppliers to qualify for additional measures in line with energy intensive industries, ensure climate change agreements are maintained and energy efficient capital investments are incentivised.”

According to SMMT, energy remains the second-largest automotive manufacturing input cost, and UK businesses already face the highest electricity costs in Europe.

Other manufacturing industries have said the new level of support falls behind that in other countries, particularly Germany, a major automaker country.