The death of Her Majesty Queen Elizabeth II cast a long shadow across the nation. Naturally, it’s delayed the important work that needs to be undertaken by the new Liz Truss-led government.
As the country begins to emerge from its mourning, top of the new regime’s to-do list is dealing with the nation’s energy crisis.
For consumers the news is encouraging, with the government pledging to protect them from price rises by footing some of the bill for their domestic energy usage.
However, businesses are in limbo. Indeed, we have worked with many that have already succumbed to the devastating combination of soaring energy costs, rising inflation and plummeting consumer confidence.
The impact on small businesses
Sadly, The Fontmell, country pub and bed-and-breakfast in Fontmell Magna, Dorset closed its doors with immediate effect recently after its owner declared it was “impossible” to run the business, which was facing a £58,000 rise in energy bills.
Owner John Crompton said the charges had “increased to such a point that we are no longer able to pass that cost onto our guests”.
This is far from an isolated incident. The latest stats from the Insolvency Service for Q2 2022 (1 April – 30 June 2022) show an 81% increase in corporate insolvencies in England and Wales over the same period in 2021. That’s a 13% increase in insolvencies from Q1 2022. The worst affected sectors include food, retail and construction.
What is the government doing to help businesses?
UK firms have been promised help with the energy bills, but only (initially) for six months. Beyond that, detail is sketchy, and the fact that Parliament is not due to sit until the middle of October (as it stands) is not inspiring business confidence.
The Prime Minister also announced that business sectors that were particularly vulnerable, such as hospitality, will be offered extra support beyond the initial six-month period, following a three-month consultation on where support measures should be focused.
Will it be enough?
While the Federation of Small Businesses (FSB) broadly welcomed the initiative, it also posed a number of questions that the government needed to answer – and quickly. They included:
- What will be the fixed unit prices (and standing charges) from October 1?
- What practically will now change – will energy retailers suspend high quotes and contract offers and recalculate from October 1?
- Will those who have accepted hugely increased bills in recent weeks be able to renegotiate to bring their bills down to reasonable levels?
All of which leaves business in limbo. As Iain Wright, Managing Director, Reputation and Influence, ICAEW, warned: “Businesses will need to know soon what happens when the support offered to them by the government ends in six months. Otherwise, they face a cliff edge, which can only mean price increases and real threats of company failures – feeding inflation, harming the economy and hurting consumers.”