Thousands of small businesses face huge rise in energy bills
Ros Atkins on why energy bills are rising
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Some companies will face shelling out “£20,000 in extra costs just to break even” as a swathe of increases to running costs puts the squeeze on companies this year. One restaurateur told how he faces a £22,000 increase in his gas and electricity bills this year. Households across Britain were rocked on Thursday when Ofgem revealed an energy price cap rise of nearly £700 from April.
The soaring cost to domestic customers has prompted campaigners for senior citizens to call for a £500 rise in state pensions to help them heat their homes.
But retail and hospitality businesses are not protected by a price cap, so are already being hit by staggering increases in the cost of gas and electricity.
Andrew Goodacre, chief executive of the British Independent Retailers’ Association, has been contacted by business owners who have seen their bills go up from £4,000 a year to £11,000 by having to take out new contracts.
“Even before Thursday’s announcement we have had energy bills increasing by 150 to 300 percent depending on the business and what deal they had before,” said Mr Goodacre.
“The focus has been on the cost of living but the cost of running a business is actually rising faster.
“Retailers will look to pass on what costs they can, to reduce their margins, to use less labour so they have less wages and to review their opening hours.”
The retail boss added: “We have calculated that if the average energy bill doubles that is another £6,000 a year on average. Wage bills are going to go up another £6,000 with National Insurance and minimum wage increases in April, and business rates will go up by about £6,000 on average then too.
“So those businesses, whether it is a shop, a pub or hairdresser, have got to find £20,000 in extra costs just to break even.”
Kate Nicholls, chief executive of UK Hospitality, agreed. She said: “There are significantly higher energy price increases in the commercial setting which is largely unregulated.
“We have the ability to negotiate long-term contracts so it is variable when this is hitting but when hospitality firms are looking at renegotiating their energy bills they are looking at increases of 100 to 150 percent.”
Top chef Simon Hulstone, owner of Michelin-starred The Elephant in Torquay, Devon, posted an online account for his restaurant showing its gas bill had soared since his new contract started last October.
His bill had been £365.24 at the start of that month but now his latest bill on Friday had more than tripled to £1,267.87.
Mr Hulstone, who also runs Burridge’s Tearooms in the seaside resort with his chef father Roger, has estimated he will be hit with a £22,000 increase in his gas and electricity bills this year, which would pay for a chef de partie.
He wrote on Twitter: “Gas bill. New contract mid-October. Not too much of an increase then. Cooking by candle soon!!”
In response, celebrity chef Michel Roux Jr said: “Raw food is the next trend, chef.”
The former Masterchef: The Professionals judge added: “It is mad and, ultimately, will have to be passed on.”
And Andrew Goodacre fears the soaring cost of running businesses will mirror Britain’s most recent major economic slump. He said: “After the financial crash of 2008/09 more businesses failed when we came out of it than when we were in it. It feels as if that may happen again.”
The Bank of England warned on Thursday that take-home pay would fall by five times the amount it did during the financial crisis of 2008, making it the biggest hit to real incomes since comparable records began in 1990.
Dennis Reed, director of over-60s pressure group Silver Voices, has hit out at the lack of support for senior citizens in the measures announced last week by Rishi Sunak to help struggling families.
He said: “There was nothing specific for older people in the Chancellor’s statement, which I found very disappointing.
“Many of us are at home all day so the heating has to be on and many have medical conditions such as arthritis on which the cold weather impacts.”
He added: “I get emails from our members who say they cannot afford the prices now, let alone after the increase in April.
“A lot of people will wrap up in an extra jumper or a duvet during the day and only put the heating on at night.
“Anyone on a state pension will be using a quarter of this to pay their energy bills. This is why we are asking the Government for a £500 a year rise in state pensions.
“We have launched a petition calling for this to replace the money lost in the scrapping of the triple lock and to help with the cost of living crisis.”
Under the triple lock, pensions increase by inflation, the increase in earnings between May and July or 2.5 percent, whichever is the greater.
It was suspended by the Government last September for a year.
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