As the cost of living crisis hits businesses and their workers, leaders from the North East have reacted to the news that the energy price cap which controls the maximum amount customers can be charged is to almost double within weeks.
The 80% rise in the energy price cap will send the average household’s yearly bill from £1,971 to £3,549 from October.
Rhiannon Bearne, Director of Policy and Representation at the North East of England Chamber of Commerce, said: “The new price cap is a bellweather for the economic stress we know so many businesses and households will be under this autumn.
Read more: Energy price cap to rise more than 80%
“Our most recent survey of businesses told us that energy concerns are second only to inflation in members’ minds right now. Yesterday we supported the British Chamber of Commerce’s new five point plan to tackle the cost-of-doing business crisis. This includes a temporary cut in VAT to 5% to reduce energy costs and Emergency Energy Grants for SMEs.
“These calls are practical and proportion to the scale of challenges facing business and consumers right now. We urge Government to act.”
Nationally the British Chambers of Commerce have drawn up a five point plan of urgent action to help businesses:
- Ofgem to be given more power to strengthen regulation of the energy market for businesses
- Temporary cut in VAT to 5% to reduce energy costs for businesses
- Covid-style support by introducing Government Emergency Energy Grant for SMEs
- Temporarily reverse NICs and put money back into the pockets of businesses and workers
- Government to immediately review and reform the Shortage Occupation List (SOL) to help bring down wage pressures and fill staffing vacancies
The plan has been sent to the Prime Minister, Chancellor of the Exchequer and both leadership candidates for the Conservative party, Liz Truss and Rishi Sunak.
Director General of the BCC, Shevaun Haviland, said: “Good business is good for our communities, and we must support firms and the individuals that run them to ride out this economic storm.
“In June, we gave the Government until the Autumn budget to get its house in order, but the latest economic projections released since then have been worse than expected. We simply cannot afford to see another month of the same old news.”
Callum Thompson, managing director at Business Energy Claims at Wallsend, said: “On the day that the domestic energy price cap has reached historic new highs, businesses are also being faced with some stark decisions: pay exorbitant rates, offer huge up-front deposits for their energy tariffs, or go without a supplier. Every business is being affected by the ongoing rising prices, and are not protected by any price cap. This means things will get worse before they get better and many SMEs will not survive the winter if something isn’t done urgently.
“SME business owners have to fuel their own homes as well so are being hit twice by the energy price rises. The impact this will have on economic and social conditions across the whole country will be nothing short of catastrophic if something isn’t done. It’s literally a threat to both lives and livelihoods.”
When CF Fertilisers in Billingham said they were being forced to stop producing ammonia – and therefore its by-product CO2 because of soaring energy prices, Tees Valley Mayor Ben Houchen said:
“CF’s decision to switch to importing ammonia rather than making their own is a short-term measure driven by the exceptionally high cost of manufacturing this vital compound in the UK, because of the sky-high gas prices we are currently seeing.
“This shows how much more needs to be done to halt rising gas prices both for households and industrial uses across Teesside.”
Federation of Small Businesses (FSB) National Chair Martin McTague added: “Small businesses are left out in the cold when it comes to energy bills, with the vast majority excluded from the household energy price cap and other protections designed for domestic household consumers.
“Unlike large corporates, small firms cannot hedge costs and negotiate deals with their large energy suppliers. Many of our members say the eye-watering energy bills could be the final nail in the coffin as they struggle to get through winter.
“We don’t have the luxury to wait until the winter, and inaction from our new Prime Minister could spell the end for many businesses. Plans for urgent intervention must be finalised and ready to go on Day 1, for whoever wins the leadership contest on September 5th.”