Wholesalers and retailers have called for a raft of measures from government to help businesses tackle the energy price crisis.
At a meeting of the Food and Drink Supply Chain APPG on Wednesday, the Federation of Wholesale Distributors called for wholesalers to be designated as vulnerable and included in the ongoing price cap.
The trade association also called for the creation of a 10-year interest-free loan scheme for businesses, and changes in planning law to incentivise the installation of renewable energy sources.
FWD head of enagement Lyndsey Cambridge told the cross-parliamentary group that some wholesalers were now turning to the use of unclean energy from diesel generators in order to manage rising bills.
She told the group that members were facing up to 400% increases in energy costs across the board.
One small wholesaler had seen costs increase from £15,000 to £50,000, a medium-sized enterprise saw bills rise from £860,000 to £3.8m and a larger company’s energy costs had increased from £10m to £23m.
It comes as wholesalers consider making redundancies and reducing the sale of products that are energy-intensive to store in order to mitigate soaring costs.
“Our members are looking at redundancies across the sector, recruitment freezes and policies not to replace departing staff,” said Cambridge. “They are also looking at reducing the sale of frozen and chilled product.”
Calls by the FWD to incentivise investment in renewables were echoed by the Association of Convenience Stores, which said that unless government support gave retailers assurance that their businesses were viable, there would be a reluctance to borrow more money to install clean energy sources.
“Businesses will delay investments and wait to see what happens, because what’s the point of investing a significant amount of money if you’re not confident of being able to survive?” said ACS CEO James Lowman.
This is despite the fact that increasing prices make the capital investment to install systems more viable.
In addition, the ACS told the APPG that retailers needed more structured support when dealing with the energy companies.
According to Lowman, convenience store owners currently negotiate energy contracts in a similar way to households, simply taking the offer that is available at the time. However, some retailers were experiencing ongoing problems in securing a deal.
“Members can’t always get offers of contracts and if they are received they aren’t always met or are unavailable for a very long period of time,” he said.
“We face all of these challenges and yet do not have the same level of support as consumers when dealing with energy companies. There is a framework for microbusinesses with Ofgem, but this is a longer-term issue which needs to be looked at.”
The overarching takeaway from the meeting was the need for the government to be clear with businesses about the level of support which they should expect.
Head of government affairs and policy at Associated British Foods Ian Mace said: “Volatility makes it difficult to negotiate with suppliers and customers. It also makes purchasing and investment decisions difficult.
“The government support announced a few weeks ago gave us a level of certainty over the next six months, but we are currently unclear about what’s coming after that. Clarity would be really helpful.”
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