FSB Energy Bill Relief Scheme Review shows 24% of businesses fear closure
A new survey by the Federation of Small Businesses (FSB) shows that around a quarter of small businesses (24%) plan to close, downsize or restructure in the next year as a result of the ongoing energy crisis.
This figure rises to 42% for accommodation and food firms and 34% for wholesale and retail businesses.
The Energy Bill Relief Scheme Review claims that small firms’ survival will depend on the levels of Government support given after the Energy Bill Relief Scheme (EBRS) ends in April 2023.
Nearly half of all small businesses (46%) said they have passed on soaring costs to their customers, with 44% considering raising prices further once the scheme ends.
Meanwhile, around one in five respondents (18%) told the FSB that they would need to keep their prices the same to stay affordable for customers. A third (30%) said they expect to cancel or scale down planned investments in the next year.
FSB recommendations in the report say the Government should:
- Continue support under the current EBRS to avoid a cliff edge on April 1, 2023;
- Consider the size, not just sector or geography, of firms when determining which businesses are vulnerable, and therefore entitled for further support;
- Maximise planning certainty over the long-term so that small businesses can plan ahead; and
- Help small businesses to invest in energy efficiency, through incentives like voucher schemes
FSB national chair Martin McTague said: ‘Our research indicates that small firms are being held back from investment and are at the brink of collapse because of sky-rocketing energy costs. It’d be a real shame and great loss to our economy if those who managed to get through the pandemic and this tough winter with government support end up closing their businesses because relief ends too sharply in April.’
‘Latest OECD forecasts suggest the UK economy will suffer the biggest hit from energy crisis among G7 nations. But the tides can be turned if the government extends the period of energy support to struggling small businesses after the EBRS ends in April next year. It’s important that the Government provide certainty to small firms for the long-term as they can’t plan on a six-month horizon.’
The findings of the report have been submitted to the Department for Business, Energy and Industrial Strategy (BEIS).
You can access the full report from here.
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