The Federation of Small Businesses (FSB) is warning that discontinuing government energy support at the end of March would force tens of thousands of small firms to close or downsize.
This comes ahead of the publication of the Energy Bill Relief Scheme review, which is due imminently – when the government will decide whether current energy support for small firms will continue after the six-month coverage ends on 1st April, 2023.
Latest FSB research shows that 1 in 4 small firms (24%) plan to close, downsize or restructure if energy relief comes to a sharp end in April next year.
This rises to 42% of firms in the accommodation and food sector, followed by the wholesale and retail (34%), and manufacturing sectors (29%).
A third (30%) of small firms expect to cancel or scale down planned investment if the government ends support on energy, while more than 4 in 10 (44%) consider raising prices to cope with soaring bills, although it will be impossible for them to pass on full costs to consumers tightening their belts amid the cost of living rises.
From local pubs and knitting shops to laundry services, small firms in this tough winter are reluctant to turn their heat up, as every extra degree will affect the viability of their small business.
FSB has proposed through the Government’s review that there should be significant support for small businesses for at least the next 6-month period, based on a fixed wholesale price.
Continuing to apply support directly to bills, as in the current scheme, will ensure that there is no deadweight cost, and will minimise the chances of small businesses who should be entitled to support missing out.
FSB Development Manager for Hampshire, Dorset and Isle of Wight, Nicky Kildunne said:
“After 2 long years of COVID-19, this Christmas was supposed to the one bringing back that small business spirit – but many small firms are now worried that they might have to shut their doors for good in a few months, if not weeks.
“More than 16 million jobs are in small firms. Our members are telling us their businesses as well as their staff are dependent on government support in this energy price crisis.
“We’d like to see the upcoming publication of the review taking business size into account, acknowledging the fact that small firms have typically lower margins and are least able to deal with skyrocketing energy costs – a purely sector-based decision will lead to deadweight and unfairness.
“At the same time, Government must intervene when energy suppliers find routes to inflate prices, raise standing charges, and ask for disproportionate upfront payments – these heavy-handed practices defeat the whole purpose of the multi-billion-pound relief scheme and will drive more small firms to go under.”
I think it is terrible.
It may be the last Xmas for a lot of older people if the energy support is lost.
But not to worry, the scrabble for Net Zero will obviously cost a few lives so really, it is all for the greater good…
Energy prices food prices mortgages etc increases generally will be the cause of much hardship very soon to families not just businesses there will / is desperate people out there including working families
what a state the country and worldwide is in .
it will be fight for survival ,evictions businesses closing etc etc
not for everyone – some of the more astute amongst us have realised that the benign inflation and interest rate environment of recent decades was not normal – and that rates and inflation would be back and high. The covid money that was pumped into the system, was the large alarm bell, indicating that inflation and interest rates would be making their return shortly afterwards.
here we are a couple of years later and things are playing out as planned. some have been saving.
this is all by design – it is cost push inflation and the russia situation is a convenient excuse – bear in mind that russia is happy to supply oil and gas – it is the west that has refused to buy it, thereby creating their own shortages and higher prices.
The plan from Day 1 was to crash the economy and bring in a social credit systems
Its happening!