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Labour leader Keir Starmer recently announced he would freeze the energy price cap, so the average household bill would not hit about £3,600 a year as forecast if it were increased.
But the energy price cap does not cover businesses. The Competition and Markets Authority (CMA) introduced the cap in 2019 after it found some homes were being charged excessive prices. It was not applied to businesses because the CMA did not find evidence of this happening in the business sector at the time.
Chancellor Nadhim Zahawi is reportedly looking at repurposing Covid schemes to help small businesses through the winter. Officials are looking at funding mechanisms that helped firms in the hospitality, leisure and tourism sectors survive lockdowns, including grants, and VAT and business rates holidays.
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However, support would be conditional on the new prime minister’s appetite for more borrowing. Tory leadership candidate Liz Truss and Kwarteng, expected to be her chancellor if she becomes the next prime minister, have tried to assure people that “help is coming”.
In a comment, Blake reiterated the need for the government to act urgently.
“First, small businesses and charities had to weather the storm of the pandemic. Now, with barely any time to recover, business owners are opening bills which have increased by as much as 600% – at a time when their customers are tightening belts.
“Charities that gave so much during the Covid emergency are being priced out of supporting our communities when we need them most. The cost of living and doing business is too high. We need urgent action to address the energy bills crisis but we have a government that’s missing in action.”
The Federation of Small Business is also concerned small companies could be left in the cold. An FSB spokesperson told the Big Issue:
“First and foremost, we need direct help for small businesses with bills. This could be done via a rebate through the business rates system for those who pay business rates, accompanied by a discretionary pot of money to be issued by local authorities. It could alternatively be directly applied to energy bills.”
“There should be a temporary reduction of taxes on energy. For example, the higher-threshold rate of VAT could be reduced from 20% to 5%. The lower threshold and domestic rate of VAT could be reduced from 5% to 0%. A VAT reduction should also help combat inflation.
“Finally, we need to extend the price cap to smaller businesses. The smallest businesses are more akin to domestic customers when deciding on their energy provider, ranging from lack of expertise in purchasing energy to poor bargaining power.”
Campaigners were also critical of the government’s lack of support for SMEs. An Enough is Enough spokesperson said: “The government’s failure to tackle skyrocketing energy bills is nothing short of scandalous.”