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Associations call on Government to provide support as energy crisis continues

27th January 2022

While support totalling c. £12bn has been announced by the Government to support families and individuals with their rising energy bills, the Government is yet to announce any substantial relief to support businesses with their rising energy bills.

Consequently, groups representing business interests across the UK have written to the Chancellor, Rishi Sunak, urging the Government to act and provide urgent support to companies already suffering as a result of the ongoing energy crisis continues.

One business owner, who runs Beauchamp Laundry Services in Birmingham, commented: “I’m extremely concerned at how things are panning out.”

He described how his company fixes their energy tariffs “for up to five years, and every time we renew a deal it seems to double. This time [i.e. next time his business renews his energy contract] I won’t be surprised if our energy costs quadruple. It’s madness.”

Sadly, he explained that this puts his business in a difficult situation as “these costs can’t be reflected in our charges because if we put up our prices … our customers wouldn’t be able to afford it.”

He added that “the Government talks about getting business back on track after Covid…but with these cost pressures it’s just ridiculous. We’ll carry on somehow because this business has been in place for the last 30 years – we’re established – but if we were just starting out we wouldn’t manage.”

Insolvency firm Real Business Rescue recently reported that, towards the end of last year, more than 6,100 bars and pubs were in “significant financial distress”, more than a 20% increase on the figures for the same period in the previous year.

Indeed, an owner of three restaurants in central London commented on how the energy crisis was affecting the hospitality industry. He explained that energy suppliers often wanted restaurants to pay a significant security deposit, or they simply charged higher rates, to protect themselves in case the business were to go under. The size of these deposits are also now likely to increase given the uncertain times that businesses still find themselves in.

The restaurant owner that “before the recent price hike I’d pay between £2,500 and £3,000 a month for energy” for a single restaurant, but now the bill for November 2021 was around £5,600. At the same time, “turnover has fallen to between 10% and 15% of what it used to be…Before the pandemic we might serve 600 people; these days it’s closer to 60.”

To manage these rising costs, his workforce was cut from 60 to 25 personnel, the business has had to make use of the Government’s support schemes and he has also sought an agreement with his landlord to repay, over a period of time, the rent debt accrued during the course of the pandemic.

However, the rising energy bills could be the biggest threat to the long-term survival of his business.

In his opinion, “energy companies are not interested in helping at all. If you don’t pay in full for a couple of months someone comes to turn off your lights…There’s been Brexit, there’s been Covid. But on top of everything else, energy costs could be the breaking point.”

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