“What happens after six months?” Small businesses react to energy bill relief announcement

Photo by Casey Horner

Small business owners have welcomed news that energy bills will be discounted this winter, but many believe the government’s support doesn’t go far enough.

Business secretary Jacob Rees-Mogg unveiled the new Energy Bill Relief Scheme yesterday, which will see energy bills reduced from 1 October 2022 until 31 March 2023.

Starting next month, energy prices will be capped for businesses at £211 per megawatt hour (MWh) for electricity and £75 per MWh for gas. Wholesale energy costs are expected to rise to £600 per MWh for electricity and £180 per MWh for gas this winter.

As with the Energy Price Guarantee put in place for households, suppliers will apply the discount to bills and the government will pay for the shortfall.

Government high streets task force expert and ShopAppy founder Dr Jackie Mulligan says the announcement has come too late for many small businesses. “The length of time they may need to wait for payments to be backdated will exacerbate the already critical cashflow issues they are facing. While it’s good to finally have some support announced, small businesses, particularly those that line our high streets, need to be helped right now.

“Most businesses will also be asking what happens after six months. One set of measures for all businesses misses the fact that certain business types and sectors are, and have been, disproportionately impacted by covid and the cost of living crisis. Wider reforms that are longer term need to be in place that help level things up. Losing local shops and services has a far bigger impact on communities and the government needs to focus on that, because there are long term social as well as economic costs.”

Shirley Leader, director of Petersfield womanwear boutique Velvet and Rose, adds: “The help with energy bills is very much welcome. We did originally hear that this would be for vulnerable businesses, so we are hoping it will cover all businesses. We would also welcome capped charges for standing charges as well as unit charges, because after six months we will still be in a vulnerable position if this is not addressed.”

In a survey conducted to Bira members at the end of August, 65 per cent of business owners said an energy price rise would force them to cut the number of staff on their payroll or reduce wages. Meanwhile, 40 per cent were considering limiting their opening hours and 23 per cent were considering closing their business.