Britain’s small companies fear they’ll get just £47 a year in government support to help them with high energy prices, leading to thousands going bust after the Treasury announced plans to cut aid from April.
(Bloomberg) — Britain’s small companies fear they’ll get just £47 a year in government support to help them with high energy prices, leading to thousands going bust after the Treasury announced plans to cut aid from April.
The new support program for businesses will cost as much as £5.5 billion ($6.7 billion) for a year, sharply down on the £18 billion spent in the last six months, Treasury Minister James Cartlidge said Monday.
The much-reduced package risks leaving small companies “at the mercy of Putin,” said Martin McTague, national chair of the Federation of Small Businesses, referring to high wholesale costs exacerbated by Russia’s invasion of Ukraine.
The FSB said it had crunched the numbers and the average small business could access just £47 while two thirds of firms “could at very most theoretically access £200.” Craig Beaumont, the FSB’s chief of external affairs, said the new policy was “rubbing insult into the wound — shameful stuff.”
The lobby group said one in four small firms will struggle to survive if they are hit with a large increase in energy costs. Small businesses employ 16 million people so a wave of collapses “could have massive implications for the UK economy,” McTague argued.
Asked on LBC radio if some companies will go bust as a consequence of the government’s new plan, Business Secretary Grant Shapps said: “I very much hope that isn’t the case.”
The £10 Pint
Tayub Amjad, co-founder of the Zouk Tea Bar in the northern city of Manchester said he expects his energy bills to jump by £150,000. The revised taxpayer support “will not scratch the surface,” he told the Today program.
If pubs passed all their rising costs on to consumers, the price of a pint of beer would soar to £10, added Charlene Lyons, chief executive officer of Black Sheep Brewery. She said pubs will have to cut their opening hours in an attempt to reduce costs.
For the Light Cinema chain, which runs 12 theaters across the UK, the jump in the cost of energy over the past 12 months has sent its bill from £1 million to £3 million each year. “For a business our size, that can take a company from profitability to non-profitably,” said Keith Pullinger, the company’s founder and deputy chairman.
The cost-of-living crisis means that Pullinger is unable to pass all of this cost onto consumers, who are also feeling the pinch. The Light’s contract ran out in October, meaning it is exposed to the fluctuating market rate for energy. Pullinger has sought to save costs by opening later. “We’re just trying to think about energy, and what time you turn everything on in the building,” he said.
Car Industry
Manufacturers are particularly vulnerable to the change. Qualplast Ltd. is part of the automotive supply chain, whose clients include car manufacturing brands such as Rolls-Royce, Jaguar Land Rover and Bentley.
David Caro has run Qualplast in Birmingham for 46 years, but the past few months have been the toughest yet. Over 12 months his energy bill has increased by 454%, reaching £10,000 a month. Caro, 72, said he teeters between breaking even and falling into a loss. “It’s winter, so we have the heating on, and we have three ovens working, so we are using a lot of energy,” Caro said.
–With assistance from Rachel Morison and Joe Mayes.
(Adds FSB claim of £47 energy support in first and fourth paragraphs.)
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