Energy bills rise is a 'world crisis' says Knight
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The Confederation of British Industry (CBI) warned that unless something is done to mitigate the price spiral for businesses, many viable companies could go bust. It called on the Government to freeze business rates for another year, which it claimed would stop commercial property tax from surging in line with inflation. CBI also urged Westminster to come up with a swift and targeted response to the crisis by launching an “ambitious” programme.
This would involve ramping up energy efficiency in people’s homes by giving them upfront financial support to fund things like installing insulation.
It also said that the most vulnerable households should receive the most targeted support from the Government.
But the group also stressed that ministers must also “explore all options for navigating the crisis” and warned that one in three employers expect that surging bills will act as a barrier to growth.
Matthew Fell, chief policy director at the CBI said: “We can’t afford to lose sight of the fact that many viable businesses are under pressure and could easily tip into distress without action.
“Decisive action now will give firms headroom on cashflow and prevent a short-term crunch becoming a longer-term crisis.”
This comes as industry regulator Ofgem is set to announce the price cap for October on Friday, with forecasters expecting this to reach around £3,500.
Sixth months after this, experts have warned that the January price cap could hit £5,000, which EDF’s managing director for customers said could push half of UK households.
This is when 10 percent of disposable is spent on energy bills.
But while a cap is placed on household bills, for businesses, there are currently no limits.
According to Alan Thomas, the UK CEO of simply Business, three in five owners are urgently calling for a review of the energy price cap.
He commented in Express.co.uk: “As the cap does not apply to businesses, suppliers are allowed to increase their out-of-contract rates by as much as they choose, to cover their own costs.
“But the surging cost of fuel, energy and the cost of living will understandably see households cut back on non-essential spending.
“This impact on consumer purchasing behaviour will trickle through to the books of small business owners.”
It comes after the Federation of Small Businesses (FSB) warned that the skyrocketing energy bills pose an “existential threat” to small businesses unless emergency helped is offered before winter.
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According to the FSB, energy bills for a typical small company have now reached a staggering £20,000, a huge hike from the £6,000 bill in 2021.
Martin McTague, the group’s national chairman, said: The new electricity and gas quotes, contracts, and bills that have landed on many small business inboxes in recent weeks and months contain, in black and white, numbers which add up to an existential threat.
“How is an independent café supposed to find another £20,000 a year to keep the lights on and the coffee machine going, when they are barely breaking even as it is?
“With five-figure annual energy cost increases common, too many small firms face impossible choices.”
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