Business groups have written to the Business Secretary Grant Shapps calling on him to rethink plans to reduce support on energy bills to shops, pubs and other local businesses, warning that it could lead to closures.
Signed by the Association of Convenience Stores (ACS), the Federation of Small Businesses (FSB) the British Beer and Pub Association (BBPA) and the British Independent Retail Association (BIRA), the letter urges the Business Secretary to enable businesses to renegotiate contracts that were agreed at the height of the wholesale energy market.
The letter sets out that the option to renegotiate contracts should be automatically available to businesses where energy suppliers can confirm:
· they negotiated their new energy contract within the peak wholesale price period of 2022 (between July and December 2022)
· they can confirm the level of wholesale price on the contract is above the EBRS wholesale price cap
· they can confirm the end date of the contract to demonstrate the length of exposure to higher prices beyond the existing EBRS (from April 2023 onwards)
The government recently announced its plans to dramatically reduce the amount of money it provides to businesses to help with soaring energy bills, with a maximum discount of just under 2p per kWh available.
This marked a significant reduction from the current Energy Bill Relief Scheme, which is running for six months from October 2022 to March 2023 and worth around £18bn. This
The signatories said “the scheme protects the hardest hit businesses, especially those who entered into fixed contracts at the height of wholesale market prices, from rates up to £1 per kWh for their electricity and the less than 2p discount provided by the Government in the new Energy Bill Discount Scheme coming into force from April 2023 will put many of these essential local businesses at risk of closure”.
Chief executive of the Association of Convenience Stores, James Lowman, said: “The Government has failed in its attempt to come up with a solution to help businesses that need urgent support on energy costs, instead opting for a scattergun approach that won’t make a dent in the bills of thousands of shops facing huge hikes in the energy bills this year. Without urgent intervention to allow businesses to renegotiate fairer contracts, local shops will be forced to close their doors in numbers.”
Martin McTague, national chair of the Federation of Small Businesses (FSB), said: “Many small firms have signed up to fixed contracts before the recent drop in wholesale energy prices. The Government must not pull the rug from under these vulnerable businesses, exposing them to massive bill hikes in contracts they encouraged businesses to sign up to in the first place. Support for this cohort of vulnerable businesses - by allowing them to renegotiate contracts so they benefit from the wholesale price reduction - should be considered.”
Andrew Goodacre, chief executive of the British Independent Retailers Association, added: “Last summer the energy market was chaotic with retailer and energy suppliers not sure what would happen next. As a result many businesses are tied into paying high rates for energy even though wholesale prices have fallen. Allowing these businesses to renegotiate will save money for the government but also be a lifeline for thousands of indie retail shops.”
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