In response to news of the Government’s energy cap draft legislation Mike Cherry, Federation of Small Businesses (FSB) National Chairman,  said: “FSB supports measures to manage the rising cost of energy for those that can least afford it, including many small businesses. However, the current proposals for a price cap on domestic variable tariffs will clearly not help small businesses, most of which are on fixed-term contracts.

“So, in setting a price cap, Government must be very clear about what it is designed to achieve, who it is designed to help and, consequently, who incurs the eventually costs. FSB is particularly concerned that small businesses – operating in an uncapped non-domestic market – could end up subsidising the domestic market where margins have been squeezed by the cap.

“Government must also be clear about what activities the proposed energy cap would cover. Energy is increasingly seen as a service, rather than a product. So any price cap must not negatively affect service levels or wider investment in technology and infrastructure. For example, the best way for households and businesses to save money on their energy bills is through investing in energy efficiency, an area where there is already not enough support from suppliers.

“Finally, a price cap in the domestic market could see more household customers eventually pushed onto fixed-term contracts. On this, FSB would advise caution. Small businesses will attest to the fact that fixed term tariffs do not automatically provide the levels of transparency and fairness required for a well-functioning market.”

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