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The smallest businesses should not be excluded from plans to cap ‘rip off’ energy bills, according to the Federation of Small Businesses (FSB). A price cap for the 17 million households on variable standard tariffs would deal a double blow to microbusinesses – these firms are the most vulnerable and so deserve protection. Under today’s proposals, they would not only miss out on the help, but would see their bills rise to subsidise households. FSB is urging all political parties to include a fair deal for microbusinesses in their plans to tackle energy bills.
FSB National Chairman, Mike Cherry, said: “The smallest businesses struggle just as much as consumers in getting a fair energy deal, and they should be included in any price cap regime.
“Instead of helping out those who need it most, a domestic cap would exclude vulnerable micro businesses. They would face a double whammy, as not only would they miss out on help with their bills, but their bills would rise to subsidise domestic consumers.
“Three in five (61%) small firms tell us energy is a significant cost to their business. The smallest businesses have much more in common with domestic consumers than big business and have little time, expertise or purchasing power. They should not be excluded from a cap, or indeed forced to pay for price cuts for others – they should be treated in the same way as consumers.”
Commenting on proposed energy price cap Stephen Murray Energy expert said “For customers who have the ability to switch – majority outside the most vulnerable – an energy price cap would be a disaster. Industry statistics tell us that around two thirds of UK households are languishing on expensive ‘standard’ tariffs, with many paying quarterly. Savings for these customers are on average over £300, or 25 per cent of their bill, yet many still do not switch.”
“One of the ‘favoured’ suggestions – a relative price cap – is that suppliers can only have a six per cent differential across all their tariffs, yet rhetoric suggests customers will see this as an incentive to switch! That looks optimistic at best. This is not a Big Six issue as many believe. A growing number of emerging and challenger suppliers have significant price differentials across their tariff portfolio and a cap would simply push many cheaper tariffs out of the market, resulting in higher prices.”
“The energy market is working better than many people give it credit for. There is more choice for consumers, more innovation by suppliers and an effective switching industry with 50 suppliers to choose from and huge savings to be made. A price cap, whether relative or actual, will lead to many of the best deals disappearing, prices finding a higher level and a growing market of disengaged customers.
“Instead of bringing in a price cap, the Government should spend some money raising awareness of switching and leave the mechanics of an increasingly vibrant and competitive market well alone.”
