Responding to the announcement by the Business Secretary of support for businesses with energy costs, Tina McKenzie, Policy and Advocacy Chair, Federation of Small Businesses (FSB) said:
“This is a substantial move and will likely be of considerable help to small firms which have been crying out for months for measures to limit the pain caused by spiralling energy prices. Today’s announcement will give certainty for the next six months, but a tough year remains ahead of many small firms.
“Many have been waiting for details on the energy bills support package to plan confidently for the winter and beyond, so it’s encouraging to have the clarity from Government on the form that its support will take. The next stage will be for small businesses to learn what the changes mean for their current contracts and for any offers they have been looking at, but waiting to decide what to do.
“Subsidising the unit costs of electricity and gas for six months is welcome, but there are those who miss out from before the six-month period, and help must not result in a cliff-edge afterwards. We are calling for a hardship fund to be created for those who fall outside of the current support, or for whom the current support will be insufficient.
“There will be hardship for some businesses which signed fixed contracts after prices rose but before April, who find themselves excluded from the scheme. FSB calls on energy suppliers to allow those customers to switch without charge to new fixed contracts, covered by the Energy Supported Price, if that makes the difference for the small business to survive.
“There will also be hardship for those who’ve paid elevated bills since April, as this help only kicks in for October usage – i.e. November bills. Help is then estimated by the Government to cover up to half the increase from that part.
“The promise of equivalent support for those using heating oil will be warmly received, as this accounts for a large number of small businesses.
“For all businesses that fall outside the scope of today’s support, or where the help is insufficient for the business to be viable, we urge Government and energy providers to introduce a discretionary funding pot, similar to the £150 million created for those households who don’t pay council tax. The remainder of the Covid Additional Relief Fund – due to be taken back by the Treasury next week – could be used for this purpose.
“Small businesses are the definition of vulnerable when it comes to these energy price hikes. Small firms do not have the ability to hedge, or negotiate energy prices, so we will be encouraging Government to continue to help small businesses across all different sectors after the six months have elapsed.
“In our view, size, rather than geography or sector, is a good indicator of whether a business has capacity to face higher bills. There is no such thing as a ‘vulnerable sector’ when all small businesses with premises have been deeply affected.
“The Government has rightly listened to FSB’s call to match energy help for small businesses with that delivered for households. We have been highlighting small firms’ plight and pitching a range of policy levers the new administration can pull, so are pleased that today’s announcement has taken notice of our input.
“With Government stepping in to help firms with energy bills, energy companies must play their role to support their small business customers.
“Energy providers must pass on the benefit of the freeze in full, and must immediately provide updated bills and quotes to each small business customer who will be wondering today what the changes mean for them.
“We’re concerned that there is no mention of a cap on rises to standing charges, which are the other main element of energy bills. While households’ standing charges will be capped, the same can’t be said for businesses, and we call on energy suppliers to support their small business customers by committing to lowering standing charges as far as possible.
“We’d like to see energy companies promise not to disconnect businesses from energy supply that are currently unable to pay for their energy bills this winter, and not ask for disproportionate upfront payments. The introduction of a ‘time to pay’ arrangement to help small businesses in arrears would also be welcome.
“Currently, small firms could be disconnected from energy supply if they’re unable to pay bills after 30 days. We will be writing to energy companies in this regard and encourage them to support their small business customers in this difficult period.”
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About FSB
As the UK’s largest business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed.
FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.