Waiting game increases energy bill fears among small firms

Responding to the latest developments with the government energy support package, Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB) said: “Small firms are still very much in the dark on whether they’ll continue to be supported on energy bills when the current Energy Bill Relief Scheme (EBRS) expires in March.

“We made it clear in our meeting with the Chancellor today that we can’t afford a cliff-edge scenario that would see a raft of business failures. The Government must announce energy support plans as soon as soon as Parliament returns next Monday.

“With the current scheme ending in three months, it’s been impossible for small firms to plan their 2023. We’ve heard countless examples of small businesses on the brink of collapse because of sky-rocketing energy bills and the lack of assurance from the Government on energy support, from the Bed & Breakfast in the Lake District that has closed for the winter to bring down bills to the fish and chip shop in the East Midlands which would fall into the VAT system, adding yet more cost, if it raises prices to cope with energy costs.

“Let’s not forget this energy price crisis affects all small businesses, which typically have lower margins and are least able to deal with cost pressures. That’s why we want to see an extension of the energy support scheme which takes into account the size of the business, rather than focused on specific sectors. This will help restore hope and optimism and grow our economy, as the Prime Minister pledges today.”

Latest FSB research shows:

  • One in four small firms anticipate that they will have to close, downsize or radically change their business model if the energy support dries up after March.
  • Before the current support came in, around two thirds of small businesses had seen their energy costs increase compared to a year earlier, and one in five had their bills at least tripled.
  • Nearly half (46%) have increased prices to partly cover the soaring bills, but most are struggling to pass on all of the costs in higher prices, at a time when their customers (whether consumers or other businesses) are also feeling the financial squeeze and having to tighten their belts.