FSB calls on government to support small businesses to face energy crisis

Small business owners are calling on the government to save high streets from being decimated as growing number of traders are forced to shut due to higher costs, slowed down sales and high energy prices.

According to data published on Friday (19) by the Federation of Small Businesses (FSB), a majority of firms – 53 per cent – expect to stagnate, shrink or fold in the coming 12 months.

The FSB’s survey of traders found that 15 per cent expected to downsize or close in the next 12 months, while 39 per cent said they would not grow at all.

The industry body called on the government to act now to shield traders.  

“Without help, we are facing a generation of lost businesses, jobs and potential,” said Tina McKenzie, the policy and advocacy chair at the FSB. 

“Any cost of living plan worth the name needs to tackle the mounting energy bills small firms face,” McKenzie said. “Support is urgently required to stop driving prices for hard-up consumers ever higher and more small firms out of business.”

She is calling for the energy rebate issued through the council tax system to be extended to the business rates system, along with other measures including cutting VAT on energy consumption, and direct help for small firms that don’t pay business rates.

Smaller traders, which employ 16 million people between them, do not benefit from the energy price cap, which puts a ceiling on costs for households but not for companies. 

The huge jump in prices is slowly filtering through to businesses as their fixed-term contracts – some of which last for several years – expire, and many have been shocked by the increase in bills, with a growing number being left with no option but to stop trading. 

Small businesses need urgent government support with the #EnergyCrisis 🔥 #SupportSmallBusiness pic.twitter.com/HK9XfrmEcl

— Federation of Small Businesses (FSB) (@fsb_policy) August 19, 2022

The energy crisis is tearing through Britain’s high streets, with warnings on Friday of a “lost generation” of small businesses, as the impact of soaring gas and electricity prices begins to hit cafes, restaurants, shops and salons. 

Across the UK, growing numbers of traders are closing their doors for good in the face of unaffordable costs driven by record inflation, with some reporting tenfold increases in utility bills, The Guardian reported on Friday (19). 

A Labour analysis showed that there were a record 20,200 fewer businesses in the second quarter of this year – the largest loss in this period since records began.  

Jonathan Reynolds, the shadow business secretary, said, “Shops, cafes and pubs risk going to the wall because this government has failed to get to grips with the energy crisis.” 

MPs said their inboxes were full of messages from desperate small-business owners warning they would have to shut up shop. Sarah Olney, the Lib Dem Treasury spokesperson, said the country needed to see “bold proposals from the government before it’s too late for Britain’s high streets and entrepreneurs … The October energy price cap rise has to be scrapped”.