90 ABOUT FSB As the UK’s business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk. With energy bills remaining high, seeing the temperature drop is giving many small businesses a chilling feeling. Every extra degree the thermostat is turned up and every extra dishwasher load or tumble dryer will have to be weighed up from an affordability point of view, for everyone from high-street retailers to manufacturers. Our latest Small Business Index for the final quarter of 2022 shows inflation continued to take a toll on small businesses, with nearly two in five saying costs were significantly higher (38%) than in the same period a year prior. Utility bills, including energy, were cited by over three in five small firms as a driver of their change in costs (61%). Many small firm’s power through the winter with the Government’s Energy Bill Relief Scheme (EBRS), which was launched in October and provides a discount on the wholesale gas and electricity prices until the end of March. It applies to small firms who are on new or existing fixed price contracts that were agreed on or after 1 December 2021, as well as deemed/out of contract or variable tariffs or similar contracts. With the scheme coming to an end in two months’ time, the much-less generous Energy Bills Discount Scheme (EBDS) will be put in place in April for eligible small firms for a 12-month period. Unlike its predecessor, the EBDS gives scant planning certainty, and limits itself to feeble discounts of no more than two pence per kilowatt hour. The risk has been transferred from Government to the smallest businesses. The rationale behind slashing government energy support is because of the fall in wholesale prices. But some say that this drop is not reflected on bills, calling the phenomenon “rocket and feather pricing”. A blind spot in the replacement scheme is that many small firms have signed up to fixed contracts at a higher rate between July and December and would therefore not be able to benefit from the latest changes in the wholesale market. These vulnerable small firms will also see their bills skyrocket in April, when their rates could treble or worse. We wrote to the Business Secretary in January and suggested allowing small firms to renegotiate contracts so they can benefit from the wholesale price reduction. This option should be automatically available to businesses where energy suppliers can confirm their small business customers negotiated the new energy contract within the peak wholesale price period of 2022, the level of wholesale price on the contract is above the EBRS wholesale price cap and the end date of the contract is beyond the existing EBRS (from April 2023 onwards). We also made clear in our letter to six leading energy suppliers that we want to see commitments to freeze standing charges for small business customers, not to ask for disproportionate upfront payment and not to disconnect vulnerable small firms. Small business entrepreneurs are, by their nature, an optimistic, dynamic and innovative bunch. One in six small firms have seized the opportunity to lower their energy bills by investing in energy efficiency over the last year, but many others face a financial barrier. That’s why we’ve called on Government to announce a voucher scheme, called Help to Green, to help small businesses reduce their consumption. After all, the cheapest energy is the energy you don’t use. Martin McTague, National Chair, the Federation of Small Businesses, looks at how the rising cost of energy bills is affecting small businesses EFFICIENT ENERGY
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