Many SMEs relying on Energy Bills Relief to survive

A quarter of SMEs plan to close, downsize or restructure if the government reduces the energy support in April next year, finds a new survey.

The Federation of Small Businesses (FSB) report, which measured the impact of the energy price crisis on small businesses, shows that small firms await with both hope and anxiety for clarity on whether they will still be eligible for support amid the ongoing government review of the six-month scheme, which is due to end on the 1^st of April 2023.

Of those surveyed, 63% say that their energy costs have increased this year compared to the previous one – 44% have reported a double, triple or even higher rise in their energy bill, and 19% say their bills had tripled or more.

As a response to this, nearly half (46%) of SMEs have already raised their prices, and more than a third have had to freeze their growth plans.

FSB National Chair Martin McTague, commented on the findings, “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.’

Martin added, “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.

“Business size must be taken into account as a relevant factor in the government review of the EBRS, given the stark impact on small firms which have typically lower margins and are least able to deal with the rising costs. It can’t be a purely sector-based decision, otherwise it’ll lead to deadweight and unfairness.”

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