Last reviewed 7 February 2022

Smaller firms have been “left out in the cold” with energy costs set to rise and no Government support, business lobby group says.

Small businesses (SMEs) are not covered by Ofgem’s energy price cap and could see their energy bills increase by as much as 300% in recent months, as wholesale gas and electricity prices continue to rise.

Gas and electricity prices may rise even further due to a combination of factors including gas shortages across Europe, lower than expected renewable energy generation over the last 12 months and increased energy demand, as the global economy begins to recover after the worst of the Covid pandemic.

Following discussions with Ofgem, Chancellor Rishi Sunak, has agreed a one-off repayable £200 discount for consumers, against the 54% hike in the price cap, and a rebate on council tax bills designed to “take the sting” out of the expected £700-a-year rise in household energy bills due to come into effect in April. But there are no such support measures for SMEs.

Mike Cherry Chair of the Federation of Small Businesses (FSB) welcomed the move to help consumers but argued that businesses also need support: “The Government is right to help households with rising costs. It should be helping the smallest firms too, which face many of the same challenges as consumers in the energy market, but without the same protections.”

Rising energy costs presents a huge problem for local businesses already faced with an increase in National Insurance contributions, higher inflation, increased business rates and shortages in supply chains, plus the Bank of England’s recent 0.25% increase on base interest rates.

“The interest rise announced today will pile yet more stress on small business owners struggling with debt. The hope, against a backdrop of spiralling utility bills and surging inflation in the round, is that it goes some way to putting the brakes on rising prices,” Cherry added.

A report yesterday in the Express newspaper says some companies could be facing up to £20,000 a year in extra costs, just to break even.