The Government’s recent announcement to drastically cut energy support for small firms has been met with disappointment and concern by the Federation of Small Businesses (FSB).
Nicky Kildunne, Development Manager for FSB Hampshire, Dorset and Isle of Wight, stated that the decision to all but eliminate help through the Energy Bill Relief Scheme (EBRS) is a huge disappointment for small businesses.
Kildunne said,
“Many small firms will not be able to survive on the pennies provided through the new version of the scheme.
“This is so out of touch. Two pence off a kWh of electricity and half a pence off gas is totally insignificant for small businesses, despite costing billions to the taxpayer. The Government will inevitably have to come back.”
Kildunne: The decision risks stoking inflation
The current EBRS scheme provides certainty for small business owners over their rates and has made a material difference to the survival of many small businesses, according to Kildunne.
However, the replacement scheme will do neither. Kildunne also warned that this decision risks stoking inflation as small business bills rise, but their prices will rise at the same time.
Kildunne: ‘The beginning of the end’ for tens of thousands of small businesses
Kildunne said,
“While the New Year should be a time of optimism and excitement, 2023 looks like the beginning of the end for tens of thousands of small businesses, which have been relying on the government energy support to survive this winter.”
One in four small firms anticipate either closing, downsizing, or radically changing
Research from the FSB shows that one in four small firms anticipate either closing, downsizing, or radically changing their business model when the Government reduces energy support after March.
Kildunne also criticised the timing of the announcement, coming just five days after the Prime Minister’s pledges to restore optimism and hope and grow the economy, and called it a “catastrophic move.”
Kildunne: There’ll be a cliff edge after March
Kildunne said,
“What’s certain from this catastrophic move is there’ll be a cliff edge after March.
“The small fish and chip around the corner, your local pub, and the family-run independent launderette – all will see much higher bills. That’s on the Government.”
“Support diluted to such a feeble level”
Kildunne also pointed out that dividing the scheme into two tiers is sensible, but not so that the tier of support for small businesses lighting or heating premises, or using freezers or ovens, has been set so low as to mean support diluted to such a feeble level.
She added,
“The Government said that taxpayers cannot prop up failing or unproductive firms, which is insulting to many small business owners struggling this winter.
“Since the onset of Covid, we’ve lost half a million small firms. Allowing more well-run businesses to go under would be a false economy. But with this absurd degraded Energy Bills Discount Scheme, it looks like we’re getting there.”
Image: tim mossholder under CC BY 2.0
