SMEs face closure this winter without support | A blog by Business Butler

SMEs face closure this winter without support

With business owners facing increasing pressure from escalating energy bills and soaring inflation, the head of the British Chambers of Commerce (BCC) has issued a stark warning. Baroness Ruby McGregor-Smith said businesses “will close their doors this winter” unless they are given support and added that the country needs an ”action plan” as soon as possible.

Baroness Ruby said government measures equivalent to those provided during the peak of the Covid-19 pandemic to help businesses were needed urgently. The Conservative peer commented that the scale of support needed for SMEs had to be “considerable”.

No price cap

Households throughout the UK are dreading the winter months but businesses are especially vulnerable to soaring energy costs because they aren’t protected by an energy price cap. Businesses across all sectors are struggling and the hospitality sector in particular. Pubs are suffering with energy costs increasing 300% and the CEOs of the UK’s biggest breweries have demanded government intervention.

The BCC president said: "One of the big measures we are asking for, and have been for some time, is for Covid-style support to be given by measure of a government emergency energy grant for all SMEs.

"I think unless there is immediate and urgent support, we will see many businesses close their doors this winter."

Emphasising the importance of SMEs to the UK economy, Baroness Ruby continued:

"We cannot be in a situation where more and more businesses are shutting down, because of costs that are absolutely outside of their control.

"We are not just talking about big businesses, we are talking more and more and more SMEs which are the lifeblood of our economy.

"They need more support now as they did during Covid, this for us is no different. All we have had so far, publicly, are many words and not an action plan. Now we need an action plan, we need a plan and we need it delivered next week."

In an interview with the BBC, celebrity chef Tom Kerridge said he’d been quoted £35,000 a month by his electricity supplier for one of his restaurants, where he currently pays £5,000. He knew of many people in the industry who were thinking about closing their businesses throughout the winter and opening again in spring because they simply can’t afford to keep trading during a period when their energy usage will be at its highest.

Turning bookings away

Businesses owners throughout the UK are facing the same dilemma, with many hoteliers facing energy costs soaring by 500% year-on-year. Due to the volatility of the market, hoteliers are unable to take bookings for next summer because they are unsure of their overheads.

Equally alarming is the news from the Guardian that major energy firms are not willing to supply small businesses because they are worried they may fold. Many suppliers are not risking taking on new customers and some are demanding £10,000 paid in advance.

The importance of SMEs

Recognising the unheralded threat facing businesses, the Institute of Export and International Trade has asked the government to establish a taskforce to help SMEs on matters including escalating energy costs.

Martin McTague, national chair of the Federation of Small Businesses (FSB) said:

“The challenge now is to deliver action that is big and bold enough to match the scale of the crisis threatening the existence of many small firms, and the jobs, livelihoods and communities which depend upon them.

“Small businesses are crying out for a comprehensive response which cuts taxes, limits spiralling bills and provides direct cash support for the smallest businesses.”

Emergency strategy

Chancellor Nadim Zahawi has said that companies could be given VAT reductions or other tax breaks and has been working on a multi-billion pound emergency strategy for the new prime minister. So, as Liz Truss moves into number 10 there will be 5.5 million small businesses eagerly waiting to hear what help they will receive to get them through this winter.

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