The government has been warned that 7,000 independently owned local convenience stores could be at risk of closure if the Chancellor doesn’t act in the Budget to target further support on energy costs.
The Association of Convenience Stores (ACS) estimates that there are a total of 6,900 independently owned convenience stores that are currently stuck in excessive fixed contracts that are putting their businesses, as well as the jobs of over 46,000 colleagues, at risk.
Stores that have signed fixed contracts during the height of wholesale prices (Q3/Q4 of 2022) are those most likely to be at risk of closure, due to the tripling or in some cases quadrupling of their energy bills for the duration of the fixed term contract, which typically last between 12 and 24 months.
For an average sized convenience store facing rates of up to 95p per kWh, this would mean paying over £75,000 per year for electricity compared to annual bills of around £20,000 in 2021.
The government has provided support for 12 months at the currently proposed level (1.9p per kWh), which will reduce an average convenience store’s energy bill by around £1,520 for the year.
However, the ACS has been clear to the government that this support is insufficient and does not go far enough to keep stores open, warning that it will “barely make a dent in the viability of these businesses, and is not sufficient enough to keep them open”.
The ACS estimates that the government can afford to provide an additional £10,000 per store this year, which at worst would be cost neutral in comparison to the tax losses that the Treasury would suffer if a store would be forced to close its doors, and that the government can also significantly reduce the amount of money that it would need to support stores with by requiring energy companies to allow businesses to get out of the fixed contracts that are clearly an anomaly. The Budget is due to take place on 15 March.
ACS chief executive James Lowman said: “We have repeatedly warned the government that there are many convenience stores who simply cannot afford the increases that they are seeing in their energy costs and without additional support they may be forced to close their doors for good. The planned energy support for businesses from April is a scattergun approach that has failed to target support for those who need it most, and this must be urgently addressed.”
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