Eye-watering £20,000 bills pose ‘existential threat’ to small businesses – stark warning

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According to the Federation of Small Businesses (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. And worryingly, this is only anticipated to get worse as industry regulator prepares to announce the new price cap (maximum annual tariff) on Friday. But while a cap is placed on household bills, albeit a worryingly high one according to forecasts, the sky is currently the limit for businesses.

This is why the national chairman of the FSB is calling for the price cap to be extended to small businesses, given they are “barely breaking even as it is”.

Martin McTague 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.”

He added that it could be nearly impossible for a “small manufacturer find another £70,000 to keep the production line going and the staff room heated”.

And according to a poll by FSB, nearly 15 percent of small- and medium-sized firms (SMEs) fear they will be forced to close as a direct result of the bills crisis.

And with no price cap on business, suppliers are allowed to increase their out-of-contract rates by as much as they please in order to cover the increased energy costs.

Since August 2021, out-of-contract rates have risen by an average of 100 percent.

According to Bionic, which offers advise to SMEs, “this means any business that lets a fixed rate deal expire without arranging a new one could see huge price hikes even though they’re using no more energy than before”, Les Roberts writes in the blog on energy prices on the Bionic website.

Mr McTague urged the Government to get a grip of the crisis as this is posing a huge threat to the UK economy.

He said: Sky-high energy costs are sucking demand out of the economy, and dampening growth.

“The Government needs to get the situation in hand.”

But according to The Sunday Times, the Government is reportedly considering offering financing schemes for businesses that are hard-pressed to pay off their energy bills.

It could involve using similar mechanisms – but with a bit of repurposing – to those used during the pandemic that provided support to companies that saw their profits plummet.

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The Treasury are said to be eyeing a number of options, including giving grants SMEs and business rates holidays to slash gas and electricity bills.

Business Secretary Kwasi Kwarteng wrote in the Mail on Sunday: “I want to reassure the British people that help is coming.”

But while Government officials “are working on a number of options”, nothing will be decided before September 5, when the next prime minister is announced.

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