Thousands of food and drink businesses face going to the wall unless they can renegotiate their energy bills, the government has been warned.
A coalition of business groups have written to business secretary Grant Shapps, calling for special measures to help firms that signed energy contracts during the peak prices between July and December last year.
Earlier this month the government announced a £5.5bn package of support, due to come in from April, as part of a drastic scaling back of help for companies.
Under the new scheme, businesses will receive a maximum discount of just under 2p per kWh – a huge reduction compared to the current Energy Bill Relief Scheme, which is running for six months from October 2022 to March 2023 and is estimated to be worth around £18bn.
The ACS, Federation of Small Businesses (FSB), British Beer & Pub Association (BBPA) and British Independent Retail Association (BIRA) are among those who have written to Shapps calling on him to rethink the plans.
The groups say business should be given the option to renegotiate contracts with their energy suppliers if they can prove they negotiated the new energy contract within the peak wholesale price period of 2022, can confirm the level of wholesale price on the contract is above the EBRS wholesale price cap, and that the end date of the contract means exposure to higher prices beyond April.
“Without support many of these businesses will fail, resulting in economic decline, a net loss of jobs and services in communities and revenues to the exchequer,” says the letter.
“We urge you to consider how you can facilitate support for these businesses to renegotiate their contracts with encouragement from government and the support of Ofgem.
“The government has failed in its attempt to come up with a solution to help businesses that need urgent support,” added ACS CEO James Lowman.
“Without urgent intervention to allow businesses to renegotiate fairer contracts, local shops will be forced to close their doors in numbers.”
“Many small firms signed up to fixed contracts before the recent drop in wholesale energy prices,” added FSB national chair Martin McTague.
“The government must not pull the rug from under these vulnerable businesses, exposing them to massive bill hikes in contracts they encouraged businesses to sign up to in the first place. Support for this cohort of vulnerable businesses – by allowing them to renegotiate contracts so they benefit from the wholesale price reduction – should be considered.”
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