New Energy Support Insignificant For Small Businesses

We’ve been calling for some certainty on energy prices for months – and it was a significant frustration that the announcement was delayed until January at the end of last year. But, now that we’ve seen it, many will be forgiven for wondering whether the statement was really worth waiting for.

Because, frankly, it offers small businesses almost nothing in support and takes away much of the current help to mitigate. We’re now looking at a real cliff edge when EBDS replaces EBSS at the end of March.

Let’s face it, these new proposals represent something like 2p off a kWh of electricity and 0.5p off a unit of gas, making it insignificant for small businesses, despite costing billions to the taxpayer.  Our own analysis shows that the discount on offer will likely be less than 3% and, on average, small businesses can get about £47 worth of discount for the year.  Around two thirds of firms (63%) could, at very most, theoretically access £200. For context, one of our members in Scotland runs a café and shop and their energy bills have soared from £2,000 to £8,000 a month.  Under £50 off an annual bill of nearly 100k isn’t going to scratch the surface.

At the same time, the EBDS also risks stoking inflation. Not only will it see energy prices – the key driver of inflation – shoot back up, it will force firms to either raise their own prices or go out of business.

Small businesses employ over 1 million people in Scotland and account for £70 billion of our national turnover, so a wave of collapses could have massive implications for the Scottish economy. It’s also worth noting that analysis shows the current EBRS scheme suppressed inflation by 5 points.

Finally, this move also reintroduces huge uncertainty.  At least with the wholesale unit price cap under the current scheme, businesses can at least get a handle on future costs and, hence, plan ahead. But, with a mere discount on wholesale prices, businesses are once again at the mercy of the global events that drive those prices.  How will this help anyone bid for a fixed price contract that runs into April, or decide when (or if) to open in 2023?

The fact is, as our latest research shows, one in four small firms anticipate either closing, downsizing, or radically changing their business model without proper energy support .

So, it’s now time for the Government to realise they’ve got this one wrong and come back with an improved plan. This is essential, to keep bills at something approaching manageable, get some sort of lid on inflation and give businesses a degree of certainty.

Shared from Federation of Small Businesses