Business leaders have called on the Government to urgently provide more detail about its package of support to ease soaring energy costs for small businesses.
New prime minister Liz Truss today announced a six-month scheme to help businesses and other non-domestic energy users such as charities and schools to deal with soaring energy bills this winter.
After the initial six months, the Government will provide ongoing, focused support for “vulnerable” industries. There will be a review in three months’ time to consider where this should be targeted to make sure those most in need get support.
At this stage, the prime minister has said only that the support for businesses would be “equivalent” to that provided to households. These measures mean that a typical UK household will pay no more than £2,500 a year on their energy bill for the next two years from 1 October through a new Energy Price Guarantee which limits the price suppliers can charge customers for units of gas.
Martin McTague, national chair of the Federation of Small Businesses (FSB), said: “It’s a huge relief for millions of small businesses to hear confirmation they will be part of the Government’s plans to help on energy. Many have been pushed to the brink by crippling energy bills, and so it is welcome that help is on the way.
“The toxic combination of uncapped energy hikes, high taxes, inflation and negative growth have become an existential threat for many.
“Constricting the scale of energy bills for small businesses is unprecedented; we now have a high-level commitment in principle to help businesses get through the winter intact. Done right, this will be a lifeline – protecting jobs, communities and future economic recovery.
“However, the announcement is very high-level and sparse on detail so we will be working with the new Government to clarify what happens next. Small businesses’ instant reaction is that this is not enough information, yet, for them to plan.”
Questions posed by the FSB include what will be the fixed unit prices, and standing charges, for businesses, will energy retailers suspend high quotes and contract offers and recalculate from October 1, and will those who have accepted hugely increased bills in recent weeks be able to renegotiate to bring their bills down to reasonable levels.
Martin added: “This must not result in a cliff-edge after six months, with the withdrawal of support to all but ‘vulnerable’ targeted industries, sectors or types of business. The definition of who falls in and out of that support will need to be looked at carefully at the three-month review.
“Our work on vulnerability of small businesses to energy costs has revealed huge bills causing damage in virtually any sector that uses energy in any meaningful way, just like most households. Any future definition of ‘vulnerable industries’ will need to be broad, realistic and fair.
“The Government should also make good on its commitment for comprehensive help for all small businesses affected. If any have energy circumstances such that, in practice, they turn out not be covered by the measures announced today, the Government must keep an open mind and ensure policy decisions do not create another group of disenfranchised or excluded small businesses without support, just like it did on income support during Covid.”
Andrew Goodacre, CEO of the British Independent Retailers Association, said business owners in his sector still had “concerns” despite the welcome government intervention.
“Making the energy rate for businesses the same as consumers still imposes a 300% increase on energy bills for many businesses, and that will still cause hardship for those business owners.
“We also believe that any review over the next six months should have a broader remit of looking at all business costs. There is limited prospect of prices reducing in six months’ time, and so we cannot afford to see business rates increase in line with inflation just as this business support comes to an end.”
