Small business owners confused about government’s Energy Bill Relief Scheme

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The Federation of Small Businesses (FSB) is urging the government to provide clearer information and support around the Energy Bill Relief Scheme (EBRS) announced in September. It says many small firms are still struggling with soaring energy bills despite the implementation of discounted rates on 1 October 2022.

In a letter to business secretary Grant Shapps, the business group says energy suppliers are charging those with newly signed contracts at rates “substantially higher than the previous period”. It also reveals some small firms are being asked to provide “disproportionate upfront payments” while others have been told that they could be disconnected if they fall into arrears.

While energy suppliers have pledged not to disconnect households that fall into arrears this winter, no such help has been promised for struggling small businesses. Non-domestic energy customers can be cut off within 30 days if they fail to pay their bills. Meanwhile, some suppliers are reportedly refusing to take on new business customers from certain sectors in case they go under this winter.

“Across the UK, small firms await their energy bills with trepidation as well as hope, in the face of harsh economic challenges which have persisted since 2020,” the letter reads. “However, the implementation of the Energy Bill Relief Scheme and apparent lack of communication from suppliers is causing some concerns.”

Small firms “confused” about discounts

In September, FSB also wrote to chief executives of six leading energy suppliers – Centrica, EDF, E.ON, Octopus, Ovo and Scottish Power – to remind them of their of roles in implementing the EBRS. It also urged them to commit to freezing standing charges for small business customers, not to ask for unreasonable upfront payments and not to disconnect vulnerable small firms. FMS says only Scottish Power responded with a holding reply while the other five suppliers have not yet responded at all.

FSB policy and advocacy chair Tina McKenzie comments: “The lack of responsiveness from the UK’s big energy suppliers speaks for themselves and matches with what small businesses have been experiencing in the past month.

“While the energy help package is welcomed by small firms, many have come to us puzzled that their bills remain sky-high, confused about how the discounts are being applied and worried about whether they could still stay open by Christmas and need to let their staff go.

“That’s the opposite of what the EBRS is supposed to achieve. We need more transparency and support around the scheme, which is designed to help tens of thousands of small businesses cope with soaring bills and get through this winter.

“The government should intervene to ensure that energy suppliers refrain from finding routes to inflate rates for contracts. Energy firms should promise not to disconnect struggling small businesses this winter, in line with their commitments to households.

“It’s utterly unacceptable for energy suppliers to ask cash-strapped small firms to cough up a large sum of deposit in advance of having any turnover or profit that can fund their energy use – when the vast majority of small businesses are fighting for survival from a record-high inflation, rising interest rates and an intensifying consumer pessimism. This is basically kicking small firms when they’re down.

“Energy suppliers need to recognise their roles in ensuring this multi-billion-pound help package serves its purpose and is not exploited at the expense of taxpayers or the livelihoods of the small business community.”