Firms to get more help with soaring energy bills
Businesses will benefit from a year-long extension of financial support with energy bills, according to Whitehall sources.
Prime minister Rishi Sunak is expected to prolong the energy bill relief scheme, which was set up in October to ease businesses through the cost crisis.
All firms are likely to be included in the scheme, rather than limit it to vulnerable sectors, as originally planned.
Downing Street is said to have surrendered to intense pressure from industry groups, some warning of thousands of company failures, and Conservative MPs in “Red Wall” seats fearful of a backlash if support is withdrawn.
However, the condition for making the scheme universal will be that payments will be lower – possibly half – compared to the current package, which ends on 31 March.
Federation of Small Businesses, national chair Martin McTague said: “Energy costs are by far the biggest driver of the inflation that businesses and consumers are experiencing, and interest rate increases are doing little to rein in energy bills, while making it harder for small firms to keep the lights on.
“SMEs are collectively carrying £33 billion extra in debt, much of it index-linked, compared to January 2020, before Covid hit. Every basis point increase means extra pressure for those on floating rates, and a disincentive to apply for finance for firms looking to grow and invest.
“Our Small Business Index found that in Q3, nearly two in five small firms applying for finance were offered a rate of 8% or higher, compared to a quarter of small firms in the same period in 2021.”
Mr McTague added: “This was supposed to be the recovery period, where the economy got back into gear, with small firms providing the engine of growth.
“The cost of doing business crisis has knocked that plan off course, and many small businesses are wondering – amid strikes and disruption, near rock-bottom consumer confidence, and continued rises in input costs – how they will stay afloat.
“The Government’s forthcoming announcement on how it will support businesses once the Energy Bill Relief Scheme comes to an end must have a compelling offer for small firms, one in four of whom say they plan to close, downsize or restructure in the absence of a sufficient level of energy support after March.
“Many small businesses are struggling at the moment. They need certainty and support, to help them make the most of the festive season, and enter the new year in a spirit of optimism.”