Local firms are facing energy price rises of more than four times the previous rate and could soon start to fail without government help when bills land this winter, local business leaders say.
The Government energy regulator announced last week that it would raise the ‘energy price cap’ for households to £3,549 per year – an increase of 80 per cent – from October 1.
But the price cap only covers domestic customers, meaning businesses and other organisations in Tunbridge Wells are facing huge energy price hikes of over four times their previous bills when they renew fixed price contracts.
Alex Greig, owner of Fuggles Beer Café and vice chair of the RTW Business Improvement District (BID), surveyed local firms and found 95 per cent are unable to afford such hikes. He said: “I fixed my energy prices for three years around two-and-a-half years ago, so will need to renew in April. “I am looking at [paying] a tariff around four to five times higher – and that’s being conservative.
“But if we’re looking at bills of £80,000- £100,000 – we’re dead,” he said. He added that he had taken measures to reduce energy consumption ‘but there was only so much you can do’.
“Over in [Fuggles Beer Café] Tonbridge, I am going to be taking out 20 per cent of the lightbulbs.
“But it’s very, very difficult to make a real hit [to costs]. The biggest expense is fridges and restaurants can’t start turning off fridges.”
Speaking to other local hospitality businesses, he says he has found 75 per cent have already had to renew energy contracts or are due to renew in the next 12 months.
“In many cases the quotes have already risen by three or four times. In monetary terms, this is akin to an increase of over £100,000 per annum,” he said.
“It’s not hit that many people so far, but it’s brutal.”
Robin Porter, managing director of Pig & Porter in Chapman Way said he expected numerous businesses to fail due to the price hikes.
He said: “As everyone is affected by this crisis it seems inevitable that disposable income will collapse and small businesses across all sectors will fail.
“This needs to be taken as seriously as the first wave of Covid.”
Tess and Murat Askin, owners of TN1 Bar & Kitchen in Monson Road added: “It was less than a year ago that our energy bills were around £1,600 a month. It’s now over £2,500 and that’s not even guaranteed or fixed.
‘If we’re looking at bills of £80,000-£100,000 – we’re dead’
“We are riding the perfect storm of energy price hikes, food and drink wholesale costs going up and consumers experiencing the same issues and possibly going out less.”
Mr Greig’s surveys found that 95 per cent of respondents said their businesses would be unviable if their energy went up by four times.
All of his respondents had already raised prices this year, and 68 per cent plan on doing so again before Christmas.
However, he warned: “Only one-third of businesses are seeing trade as they’d expect. Over 50 per cent have noticed a dip in trade recently.”
Businesses have already begun to close, with Thai Lemongrass in Southborough announcing it was closing its doors for the last time this week due to the cost-of-living crisis.
The Federation for Small Businesses (FSB) is calling for direct help with bills for small firms, as well as asking for a VAT cut on energy.
Tim Aker, FSB development manager in Kent, said: “Without additional support, we fear large numbers of businesses may close or downsize because of dramatic increases in energy prices.
“Our final plea is for consumers to use their local independents, small retailers, and hospitality venues if and when they can.”
However, Mr Greig said offering grants was ‘too broad a stroke’, while a VAT cut on energy for the commercial sector would cost a lot of public money and ‘won’t touch the sides’ for businesses.
He called instead for the government to set a ‘unit cost’ of energy and standing charge at pre-crisis levels, with the difference between that ‘realistic’ price and the market price of energy paid for by the energy company or via government with a rebate to businesses.
“It is targeted. You’re not offering a VAT cut to any business which doesn’t need it because its fixed-price contract is still running. As for grants, how do you means-test this? It’s very open to fraud – we saw that with Covid measures,” added Mr Greig.
However, he said without government help, small businesses would not survive and has written to Tunbridge Wells MP, Greg Clark, to ask what the government can do to help struggling businesses.
Mr Clark, who returned to government as the Secretary of State for Levelling Up, Housing and Communities in July, told the Times he would be raising the issue with the new Prime Minister when he or she is elected next week.
He added: “The record level of oil and gas prices is having a big impact on the finances of small businesses.
“While the war in Ukraine is driving higher prices, I think there is a strong case for helping viable businesses to get through this period, as was done successfully through Covid.
“I will make sure that the new Prime Minister is aware of the pressing need for this.”