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Birmingham Post
Birmingham Post
Business
Alistair Houghton

Government must act NOW on energy crisis - Martin Lewis and Chambers demand support for homes and businesses

The Government must offer a massive package of support for householders and business owners to help with them with the soaring cost of energy, business and industry leaders are warning.

It was confirmed today that the energy price cap will rise by 80.06%, with warnings that many people may be unable to pay bills and that companies may be forced out of business due to soaring costs.

There are widespread calls for Government intervention, and for measures including an emergency energy grant for business.

READ MORE: Energy price cap rise: 'Zero creative thinking from government'

Consumer champion Martin Lewis said the next Prime Minister would have to spend billions to solve the crisis amid warnings millions could stop paying their energy bills as part of the "Don't Pay" movement.

He told ITV’s Good Morning Britain: “While I think it should have come earlier, my hope is on September 5 there will be a new Prime Minister. We’ve heard from both the candidates, but they seem to indicate they understand the scale of the crisis – what we need to hear is concrete solutions.

“And let’s be absolutely plain: there are many methods that you can put in place to alleviate and mitigate some of the terrible damage that the rising energy prices are causing.

“So I’m going to be agnostic over the solution, but it will involve spending substantial amounts, billions of pounds of Government money, to stop some of the most vulnerable and many middle income earners from having some terrible choices to make this winter. We have to hope that will be in place.

“And I suspect if it isn’t in place, then people coming from the Don’t Pay movement are going to become a louder voice in this country.”

Emma Pinchbeck, chief executive of Energy UK, said the new price cap will be “really scary” for a lot of people and businesses across the country.

She told Sky News: “This is a crisis that has been caused by the international gas market and so we need to tackle that at a systemic level, as well as making sure that people have urgent help right now.”

She added: “We need something that is broad-brush that supports vulnerable people and really tackles what will be a massive cost-of-living crisis, but also something that helps middle income households and the wider economy.”

Addressing politicians, she said: “This is bigger than you think that it is. This is a whole-economy problem.

“This is urgent and we need to do more than you think that you need to do, and you need to do it now.”

Chambers push five-point plan for business

Chambers across the country, including East Midlands Chamber and North & Western Lancashire Chamber of Commerce, are promoting the British Chambers of Commerce's five-point plan for Government to support businesses. Those points are:

  • Ofgem to be given more power to strengthen regulation of the energy market for businesses
  • Temporary cut in VAT for energy from 20% to 5% to reduce costs for businesses
  • Covid-style support by introducing a Government emergency energy grant for SMEs
  • Temporarily reverse the increase in national insurance contributions and put money back into the pockets of businesses and workers
  • Government to immediately review and reform the shortage occupation list to help bring down wage pressures and fill staffing vacancies

East Midlands Chamber chief executive Scott Knowles said: “The cost-of-living crisis and cost-of-doing-business crisis are two sides of the same coin – without alleviating the financial pressures on our firms, we will have a cost-of-doing-nothing crisis. Companies will be forced to pass on rising costs for energy, people and raw materials to consumers and continuing to hit people in the pocket.

“In the East Midlands, 62% of organisations told our Quarterly Economic Survey they expect they will be forced to increase their prices in the coming months for these reasons, while confidence in their ability to grow is declining.

“At more than 10%, inflation is at a 40-year high; we are seeing the largest increase to interest rates in 27 years; and eye-watering energy bills are causing real concerns among both businesses and their employees.

“The worsening economic projections being published daily mean we can’t afford to wait any longer without practical support measures being put in place as we now risk businesses being forced to scale back or shut down altogether – resulting in people losing their jobs and livelihoods.

“Now is the time for action. We recognise there is no easy answer to the challenges we face but the Government must start by introducing an energy price cap for businesses, like in the residential sector.

“This should be frozen at an affordable level, according to size and sector, for at least the next year until a long-term solution can be devised by Government working in collaboration with the private sector. Scottish Power has already proposed a desirable solution to Government that would fix prices for two years via guaranteed loans to energy suppliers.

“This would help give businesses the headroom and certainty they need to invest in their plant, machinery and people – all crucial drivers of productivity improvements, which will ultimately help us to beat the inflationary pressures that have led to this cost-of-doing-business crisis.

“However, what is absolutely clear is any short-term fixes should not be at the expense of the net zero agenda. Organisations are already mapping out their own business plans with sustainable growth in mind, with our research showing the proportion of East Midlands firms selling green goods and services has trebled in the past seven years, so we must also continue to invest in the infrastructure that enables a green economy to flourish.”

Raj Kandola, head of policy at Greater Birmingham Chambers of Commerce , said: “As data from our recent Quarterly Business Report has shown, local businesses have been suffering for months from the huge spike in inflation, with a record number under pressure to raise their prices and many are facing huge overheads which are simply unsustainable in the long term unless action is taken.

“Both of the candidates in the running to become Prime Minister have alluded to the severity of this crisis but neither has set out a comprehensive plan on how they will effectively help not only households but also businesses to get through the next few months.

“The time for political grandstanding is over – businesses need the Government to intervene right now otherwise many will simply not survive this crisis in the long term.

“Introducing an emergency energy grant for businesses, removing VAT from business energy bills, reversing the recent increases to National Insurance and introducing temporary VAT relief measures for hospitality and retail businesses would offer much need respite and give firms the breathing space they need for the coming months.”

Hampshire Chamber calls for 'radical thinking' from Government

Ross McNally, Hampshire Chamber chief executive, said: “We cannot continue to have the wholesale market price for gas dictating all energy prices in the UK when that market can be hugely impacted by major one-off external factors such as the war in Ukraine. That link must be broken so global commodity markets do not set the price we pay for our North Sea gas, half of the total amount we consume.

“Government intervention is simply not supporting businesses at all. The latest data from the Federation of Small Businesses shows that 53 per cent of firms expect to stagnate, shrink or fold in the coming 12 months, due to unaffordable costs driven by record inflation and huge increases in utility bills – and that is only going to get worse.

“Smaller traders, who employ a total of 16 million people, do not benefit from the energy price cap, and there were a record 20,200 fewer businesses in the second quarter of this year. We are in a grievous situation.

“The price of gas is nine to eleven times higher than usual, with the cost of a therm rising from 60 pence to £5. That means the UK energy bill rising from £15 billion to £75 billion this year.

“The answer has to be radical thinking; wholesale changes are needed to allow UK energy prices to be set more correctly. It is a complex procedure as we also sell into international markets, but the wholesale rate is false right now having been weaponised.

“The short term answer may well be subsidies, with the Government intervening and absorbing the latest increase to freeze prices where they are now, estimated at £40 billion for this winter – but in reality this just reinforces the weaponised market rate and cap calculation.

“In the long term we must focus more on growing domestic energy production and supply, including cheap renewables, and separate our production from global energy prices. Energy supply is a national security need and the new Prime Minister must make it the number one priority.”

Energy industry trade body calls on Government to support households and firms

Energy supplier trade body Energy UK has warned charges its members will be forced to pass onto households could be “simply unaffordable".

Its director of regulation Dan Alchin said: "This rise, while widely predicted, will be hugely worrying to customers. We know many customers are already struggling with energy bills and other costs and for millions of households, these latest increases will be simply unaffordable,”

“The rise is driven by the cost of buying gas on the wholesale market, which has been at record levels for about a year now – with prices this week 10 times what they were before the crisis.

“These costs are out of the control of energy retail suppliers who need to recoup them, otherwise we risk more going out of business in addition to the 30 that have done so since last August – causing huge cost and disruption to customers.

“However bills of this size were unimaginable a few months ago and we cannot expect customers to bear the brunt.

“Retail suppliers will continue to do all they can to offer help and support, especially to their most vulnerable customers, but faced with bill increases of this size and the numbers of customers who will need support, it won’t be enough.

“The Government must step in urgently and put in place further support for this winter and with energy costs likely to remain high for the foreseeable future, look at ways to keep bills down next year as well – as we outlined in our letter to the Chancellor last week.”

ScottishPower chief executive Keith Anderson, said: “The size and scale of this issue is truly catastrophic for UK households and that’s why only a big solution can tackle it once and for all to shelter people from the worst this winter.

“We have offered the Government a plan, backed by the industry, that can be delivered this year, tailored in line with their priorities and will support the UK economy – with the cap set at £3,549, what billpayers need now is to hear what additional help is coming.”

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