The Energy Bill Relief Scheme (EBRS) coming to an end in seven days could endanger the future of hundreds of thousands of small businesses.
That’s according to research conducted by the Federation of Small Businesses (FSB), which warns that nearly 370,000 small firms who fixed their energy bills last year may need to shrink, restructure, or close when their bills revert to a higher price on 1st April, as help for energy bills is due to be significantly downscaled.
The new government scheme, the Energy Bills Discount Scheme (EBDS), will offer far lower support for small businesses.
While market prices have stabilised for those fixing their contracts now or who are on variable tariffs, those who fixed last year will see substantial increases as they are locked into a high price before the government’s relief, the FSB has said.
Many small businesses have reported to FSB that their energy bills had skyrocketed three, four, five-fold, or even more between 2021 and 2022.
The FSB research found that around 24% of small businesses are locked into energy contracts signed last year, at a time when wholesale prices were soaring.
Additionally, more than a quarter of this group (28%) could have to downsize, rethink their business model, or even close when they are hit by the rise in energy costs, according to the report.
According to Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB), the imminent rise in energy bills on April Fool’s Day will have serious consequences for hundreds of thousands of small businesses.
Ms McKenzie said: “In a week’s time with the rollback of government support, this group of vulnerable small firms will see their bills revert to high rates. This cliff-edge will also hit consumers as businesses will have to raise prices to cope with soaring bills, driving up inflation.”
A Department for Energy Security and Net Zero spokesperson told ELN: “The government has provided an unprecedented package of support, enabling some businesses to pay around half of predicted wholesale energy costs last winter, and we’ve pledged further energy support from April onwards through our EBDS.
“Our UK Business Climate Hub provides businesses with a suite of tools for measuring, reducing and reporting on their emissions, and we’re also offering support for energy efficiency investments.
“This includes our £450 million Boiler Upgrade Scheme, which is open to non-domestic buildings and provides grants of up to £6,000 towards the cost of installing a heat pump.”