Luke Moore considers the impact of the government's plans in dentistry.
The past few months have been a whirlwind for the nation. We have witnessed announcement after announcement, which has made navigating and forecasting the impact on dentistry all the more challenging.
Back in September, ex-prime minister Liz Truss introduced the Energy Bill Relief Scheme as part of ex-chancellor Kwasi Kwarteng’s mini-budget. On October 17, 2022, the new chancellor of the exchequer, Jeremy Hunt, provided a few dramatic U-turns, many of which have placed further uncertainty on households and businesses across the country.
Liz Truss had announced that businesses will be protected for six months until March 31, 2023, under the Energy Bill Relief Scheme. In Northern Ireland, there is a comparable Energy Bill Relief Scheme that is likewise placing discounts to energy usage. After this period, this scheme will focus only on vulnerable industries. It remains to be seen how the Energy Bill Relief Scheme, which began on October 1, 2022, will seriously impact the dental sector.
A brief outline
Essentially, the Energy Bill Relief Scheme is applicable to those on a non-domestic contract, including businesses, charities and public sector organisations. They must be on an existing fixed price contract (agreed on or after December 1, 2021), signing a new fixed price contract, on default/deemed/out of contract or variable tariffs, or on flexible purchase contracts. For those in Great Britain, prices have been set at: £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas. Of course, following the pandemic, the cost-of-living crisis and now the rising energy costs, many dental practices have no doubt had a challenging past two years – will the Energy Bill Relief Scheme truly provide the relief our sector needs?
What does this mean for dentistry?
Ultimately, depending on when a dental practice fixed their tariff or indeed if they did fix it, they’ll still be paying around 200-250 per cent more than they were last year, on average. In real terms, for most practices this will be a cost increase of around £4,000 per annum.
Plus, it seems that materials and lab fees have increased by around 1-2 percentiles each from where they were in the first six months of 2022. This is to be expected, but some dental laboratories are actually quoting practices triple the price of what they’d normally quote. This, of course, comes as a result of the rising costs of raw materials, which can be associated to a softened pound and a strong dollar. While the pound is still recovering from its dip that occurred after the ex-chancellor’s mini-budget announcement, anything bought in dollars (which a lot of international imports are) is still considerably more expensive than it was.
The new chancellor reversed all tax cuts save the removal of the 1.25 per cent rise in National Insurance and the Health and Social Care Levy, which was previously planned to come into effect as a separate tax from April 6, 2023. While this means that dental professionals are able to keep more of their pay, it’s likely this increase will be offset by other rising costs.
What are the positives?
It’s worth mentioning the investment zones, which ex-chancellor Kwasi Kwarteng announced in his mini-budget back in September 2022, have been committed to by new chancellor Jeremy Hunt. For new businesses, or existing ones looking to expand in these areas across the UK, there are several attractive benefits. For instance, a newly-built squat practice could receive a discount on business rates (or even a complete exemption), and new employees won’t have to pay National Insurance on earnings up to £50,250 per year.
So, for anyone looking to expand their practice and take on new premises, wishing to relocate or considering setting up a squat, doing so in one of the 38 investment zones means they can look to make a significant saving in the first year. This is especially so if they chose to open on a high street, where business rates are often one of the biggest costs.
Looking forward
The Energy Bill Relief Scheme was announced to alleviate some pressures of energy bills as we move into the colder months – however, in conjunction with other costs that are steadily rising, will businesses in the dental sector feel the relief?
We’re living in times of intense change, and it’s difficult to ascertain what will be announced next. This is undoubtedly creating much anxiety among business owners and households alike. There are positives to bear in mind, though, in the form of the investment zones and their lucrative offerings to new or expanding businesses. Of course, we don’t yet know whether these announcements will remain the same once we gain a new prime minister, and potentially a new chancellor.