Energy Price Pledge Must be a Lifeline for Small Businesses

Small firms will be reassured by the Prime Minister’s announcement, but will need detail in order to plan for winter

Responding to the announcement by the Prime Minister of support for small businesses to ease the energy cost crisis, National Chair of the Federation of Small Businesses (FSB) Martin McTague 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.

“FSB is proud to have played our part in championing small businesses’ plight and pitching in ideas to the new team in power, and so we have contributed to today’s intervention.

“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.”

The statement appears to leave a number of questions unanswered, including:
• What will be the fixed unit prices (and standing charges) from October 1?
• What practically will now change – will energy retailers suspend high quotes and contract offers and recalculate from October 1?
• Will those who have accepted hugely increased bills in recent weeks be able to renegotiate to bring their bills down to reasonable levels?
• As a small business normally gets quoted for at least 12 months, does that new quote include 6 months at a low rate and 6 months at a high uncapped rate? How does the energy retailer know who to quote extra support to, for the 2nd six-month period?

Martin McTague 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.”