7 days until ‘energy tipping point’ for pubs

24-Mar-2023 - Last updated on 24-Mar-2023 at 11:23 GMT

Initiative change: the current Energy Bill Relief Scheme is set to end on 31 March and will be replaced by the energy Bill Discount Scheme (image: Getty/bernie_photo)

The closure of the Energy Bill Relief Scheme (EBRS) for firms has the potential to mean companies are forced to close, downsize or restructure, a business organisation has warned.

The Federation of Small Businesses (FSB) worked out how much bills could rise when the EBRS replacement – the Energy Bills Discount Scheme (EBDS) – kicks in on 1 April.

The FSB estimated a pub using 48,000kWh a year in electricity and 192,000kWh in gas that signed a new contract in August 2022 would have received a reduction of £60,000 on its estimated £85,000 annual energy bill under the outgoing EBRS.

With the new EBDS scheme, the pub would receive just over £2,000 in support, leaving a balance of £83,000.

The federation revealed a pub owner in the Midlands said his monthly energy bill would be increasing from £1,800 to £11,000, equating to an annual rise of more than £110,000.

Furthermore, its research showed about a quarter (24%) of small businesses are locked into energy contracts signed last year when wholesale prices were rocketing.

Cliff edge for all

Some 28% of this group could have to downsize, rethink their business model or close when they are hit by the hike in energy costs.

FSB policy chair Tina McKenzie said: “The jump in energy bills on April Fool’s Day won’t be a laughing matter but will be a shock to hundreds of thousands of small businesses that signed up to fixed contracts when the Government discount was guaranteed under EBRS.

“In a week’s time, with the rollback of Government support, this group of vulnerable small firms will see their bills revert to high rates.

“This cliff-edge will also hit consumers as businesses will have to raise prices to cope with soaring bills, driving up inflation.

“Some 370,000 small firms could also be forced to consider downsizing, restructuring or closing as it is impossible to pass on the full costs to customers, who cannot suddenly afford to pay £25 for a pizza or see the price of a pint double.

“There’s much more that could and should be done rather than leaving small firms high and dry. Allowing the most vulnerable small businesses to renegotiate or ‘blend and extend’ their energy contracts to better reflect lower wholesale energy prices is the least the Government and energy suppliers could do.”

Equal partners

The FSB outlined longer-term suggestions that would also help small firms’ progress towards net zero through a ‘Help to Green’ scheme.

This would provide small businesses with a £5,000 voucher to invest in energy-saving or energy-generating measures such as solar panels, better insulation or a heat pump.

McKenzie added: “A dozen trade associations representing businesses of all sizes and sectors have come out to endorse the FSB initiative of ‘Help to Green’.

“This scheme would be on par with Government support for homes and public buildings to retrofit.”

The organisation went on to highlight how the sector needs to be treated by the Government amid the rising utility bill hikes.

“Our message to the Government is – show the small business community they are being treated as equal partners in this energy price crisis,” McKenzie said.

“That would keep 370,000 small firms off the cliff as well as the jobs and communities that depend on them.”