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Energy costs restrain growth for small businesses

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There are a few essentials restaurant owners and pub landlords cannot do without: staff to run their kitchen, a restaurant insurance or pub insurance, water and, of course, energy.

The businesses' dependence on the latter is being increasingly abused by utilities companies, the Forum of Private Business (FPB) has warned.

According to the business support organisation, rocketing energy costs are causing severe difficulties for UK small businesses.

In a recent survey among the forum's members, 94 per cent of those interviewed said they have seen energy bills increase over the past year, with 82 per cent saying rising costs have impacted adversely on their business.

Almost three-quarters of respondents (74 per cent) said the cost increases had inhibited their growth.

The figures "show clearly that small businesses are being squeezed from all sides", FPB chief executive Phil Orford said.

He called for a cap on back billing and fairer contracts to prevent them from being 'rolled over' onto more expensive deals.

"We need small and micro-businesses to be given better protection from practices such as back billing, where they can be charged tens of thousands following meter errors that are in no way their fault, and rollover contracts."

A robust code of conduct policing the activities of energy companies would be "a step in the right direction", he claimed.

The study found overall business inflation is running at 8.5 per cent, with micro businesses employing between five and nine staff experiencing an even greater rate of 11 per cent, which is the same level seen in the manufacturing sector.

Further to this, a significant 67 per cent reported increases in staffing costs. According to the survey, reduced profitability was by far the biggest impact of cost increases.

Unsurprisingly, the forum's research shows that businesses that are more reliant on energy, such as manufacturers, and those in transport and labour-intensive service sectors such as restaurants, reported higher-than-average cost increases.ADNFCR-873-ID-800785836-ADNFCR

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