The Federation of Small Businesses (FSB) has warned that tens of thousands of small firms will have to close or downsize unless government energy support continues after 1 April.
FSB also found that energy suppliers had filed winding up petitions against cash-strapped small firms when they fall into arrears. Suppliers were also asking for disproportionate upfront payments: “Out of the three gas suppliers I approached for new quotes, two including my incumbent supplier wanted a £16,000 deposit,” said Rona Tait, who runs laundry service TDS Commercial in Isleworth, London, despite having a good credit rating.
New FSB research found that 24% of small businesses plan to close, downsize or restructure if energy relief comes to a sharp end in April next year. Nearly have of small firms (42%) in the accommodation and food sector, a third of wholesale and retail firms (34%) and almost a third of the manufacturing sector (29%) would shrink or disappear.
To manage bills, 30% of small firms expect to cancel or scale down investment and 44% may raise prices to cope with soaring bills. And small firms are reluctant to turn their heat up.
FSB has proposed through the Government’s review that there should be significant support for small businesses for at least the next 6-month period, based on a fixed wholesale price. There should however be further controls added on energy suppliers to prevent them cutting vulnerable small businesses off who fall into arrears, hiking their standing charges and enabling them to offer Time To Pay in the same manner as HMRC with tax debts.