Sky-rocketing energy bills “could be the final nail in the coffin” for many firms according to the head of Federation of Small Businesses.
Smaller companies “don’t have the luxury to wait until the winter” for help with rising costs, and an “urgent intervention” is needed from the next prime minister.
The comments were made by FSB chair Martin McTague following this morning’s news that the household energy price cap will rise to £3,549 in October.
Calling energy prices “eye-watering”, he said smaller companies “cannot hedge costs and negotiate deals with their large energy suppliers”, and will suffer more due to rising bills.
“Many of our members say the eye-watering energy bills could be the final nail in the coffin as they struggle to get through winter.”
Urging Tory leadership hopefuls Rishi Sunak and Liz Truss to take action “inaction from our new Prime Minister could spell the end for many businesses”.
Plans for an intervention “must be finalised and ready to go on Day 1”, following the result of the contest on 5 September.
Writing in City A.M. this week, chancellor Nadhim Zahawi said there would be “ready-made options” to tackle the energy crisis when the next PM enters Number 10.
McTague said the FSB has been pitching to government policies that may help, including direct help through business rates, a reduction of taxes on energy, green vouchers and extending the price cap to small businesses.
“Cost pressures could be eased through a reversal in the recent national insurance hike”, he added. “Increasing the threshold of small business rates relief to £25,000 would take 200,000 businesses out the rates system and help reduce overhead costs.
The FSB estimates that between February 2021 and August 2022, bills have risen by 349 per cent for electricity and 424 per cent for gas over the same period.
This means for average small firms, their electricity bill has increased from just over £4,700 to £21,200, and a gas from £1,350 to £7,050.
“The cost of doing business crisis underpins the cost of living crisis. Inaction won’t just lead to spiralling prices but to a generation of lost businesses, jobs and potential”, he said.