To stop businesses going into lockdown for good, government must act fast

The doom-laden countdown to Ofgem’s expected announcement this week of an 80%-plus energy price cap increase has understandably sent shivers down spines in households across the UK.

With IGD research claiming 22 million consumers plan to cut back on heating and eating, demands for urgent ministerial intervention are growing ever more pressing. But the political vacuum from the Tory leadership battle is every bit as serious for food and drink companies, for whom no cap exists at all.

Shop owners and suppliers question whether they can even make it beyond Christmas, amid reports of 300%-400% rises in energy bills on average. It’s not just the scale of the increases. It’s the speed, with one grower reporting this week how on-farm cold-store costs rose from £150k to £500k in the space of a fortnight.

It’s a huge challenge for even the biggest supermarkets and largest suppliers, but most exposed are smaller operators, including convenience stores, cafés and pubs, of whom a reported 70% do not expect to survive the winter.

It is truly heart-breaking to see viable and indeed booming companies facing being brought to their knees through circumstances beyond their control. Which is why the government must meet urgently with industry leaders to discuss ways to mitigate this existential threat.

While business needs to be part of the discussion about how the government can step in, big decisions also need to be taken about the burden of planned future regulation, ways banks can be encouraged to offer greater support and how government can work with energy companies to cushion the blow.

If we need any proof of what happens if you fail to act, the all too predictable return of the CO2 gas crisis, another by-product of the energy price nightmare, is it. Once again retailers and suppliers are facing product shortages because of a lack of planning, as if times were not tough enough already.

The government needs to listen to what will be needed to keep the supply chain going, as it belatedly did in lockdown. Otherwise, the next mass lockdown will be the businesses themselves turning the key for good.

The UK grocery retail sector is incredibly resilient. The fact that Yo Sushi has emerged (as Snowfox) from its Covid-driven CVA with a pivot in its business model towards grocery that delivered a near 50% jump in sales last year, winning a string of retailer contract wins, building on existing partnerships, and doubling profits in the process, is a case in point. There’s strong momentum, with sales up 60% in 2022 and more contract wins.

Picadeli, another exciting international success story in the omnichannel foodservice grocery space, is also set for its UK debut imminently, proving there are great ideas waiting to happen.

But even the most resilient, adaptable and clever businesses are not averse to the unprecedented vicissitudes of the current market. Above all, the government has to step up to look after the most vulnerable, and that includes businesses too. Or all the good work that was done in the pandemic will be lost.