Member Article

High energy bills impacting on small business

Spiralling energy costs are impacting on small businesses, with many experiencing increased bills over the last year.

A recent survey from the Forum of Private Business has found that as many as 82% of respondents considered rising costs to have impacted adversely on their business.

More than half said they have impacted on staffing costs, and 74% reported that cost increases have inhibited their growth.

The study found overall business inflation to be running at 8.5%, and micro-businesses with between five and nine staff experiencing an even higher rate at 11%; the same level experienced by the manufacturing sector.

Chief executive of the Forum, Phil Orford, said: “The situation doesn’t look set to change in the foreseeable future as all of the ‘big six’ suppliers have put utility prices up in time for the peak winter season.

“We need small and micro-businesses to be given better protection from practices such as back billing, where they can be charged tens of thousands following meter errors that are in no way their fault, and rollover contacts.

“A robust code of conduct policing the activities of energy companies would be a step in the right direction.”

The hardest hit sectors include manufacturing, transport and labour-intensive service sectors such as catering, with others such as insurance, property and finance noting significant increases.

Some of the factors affecting cash flow included competitors undercutting firms on price, and late payment.

Around 45% of firms said that regulatory demands meant they spent so much time on compliance, that it impacted the time they had to devote elsewhere, such as in cost-cutting practices.

The Forum has recommended several measures to combat the affects, including a fuel duty escalator, reductions in VAT and simplifying the tax system, more thorough red tape reform and changes to employment law.

Mr Orford went on to say that members were telling the Forum that they wanted to see tax reforms, such as the integrating of income tax and National Insurance in order to reduce compliance costs.

“It’s also important for businesses themselves to be proactive. Most businesses understand it is necessary to put in place procedures to control costs, and it is always advisable to shop around for better deals,” he said.

“But the Government needs to strike the right balance between raising taxes to repay national debt and leaving more money in the hands of small businesses to promote wider economic growth. It has not found that balance yet.”

This was posted in Bdaily's Members' News section by Tom Keighley .