UK Edition
The Government is considering Covid-style bailouts for small companies facing ruin from energy bills, as energy executives warn ministers they fear civil unrest this winter without major interventions.
Ministers are understood to be drawing up a list of options to present to the next prime minister when Liz Truss or Rishi Sunak takes office next month.
A grant scheme for small businesses is also among a range of proposals put forward by the British Chambers of Commerce to the Chancellor Nadhim Zahawi and the Business Secretary Kwasi Kwarteng.
Small businesses face “a tsunami of costs”, warned Shevaun Haviland, director general of the BCC. She called for a repeat of the support offered through the pandemic.
“Using the system that was put in place during Covid, for example grants paid by local authorities, would help those at the smaller end who are really struggling to keep going,” Ms Haviland said.
The BCC estimates that around 4.5m small and medium-sized enterprises (SMEs) will need around £5,000 each to afford their power bills over the winter, amounting to £23bn of Government support.
Without serious aid “businesses will have to reduce output, stop hiring and some will have to cease trading”.
Alternatively, the BCC has suggested taking money off businesses’ bills by giving the money directly to energy suppliers, as is happening with household gas and electricity this winter.
“The Government put in so much effort and time and money to support those businesses through Covid - don’t give up now, we don’t want to go backwards,” Ms Haviland said.
Energy company bosses have warned ministers they fear civil unrest if nothing is done to cushion the blow of rising bills.
One senior industry figure said they were concerned about what could happen when households "realise how bad this is going to get". The subject has been raised at roundtable meetings with the Government.
The Resolution Foundation said “radical” policies are needed to support the most vulnerable with rocketing bills.
The think-tank said in a report published on Thursday that Labour's proposal to freeze the price cap at £1,971 would cost the taxpayer £36bn this winter alone.
The richest fifth of households would benefit more in six months than they would in a year if Liz Truss, the frontrunner to become the next PM, cancelled the recent rise in National Insurance.
Any blanket freeze should be partly paid for with an extra penny on all income tax rates, the Resolution Foundation said. This would raise £9.5bn, with 60pc paid by the top fifth of households.
Alternatively, a "social tariff", with big bill discounts for the lowest income households would also benefit the poorest in society.
As well as grants for small businesses, the BCC wants VAT on businesses’ energy bills to be cut from 20pc to 5pc and for April’s National Insurance tax increases to be postponed for at least 12 months.
Ms Haviland added that the Government should look at giving energy regulator Ofgem more powers to compel energy companies to offer small businesses new fixed rate deals.
A Government spokesman said: “The civil service is ready to deliver on the commitments of whoever wins the leadership context.”
“We’ve cut taxes for hundreds of thousands of businesses by increasing the Employment Allowance and slashing fuel duty.
“We’ve also introduced a 50pc business rates relief for retail, hospitality and leisure businesses and put the brakes on bill increases by freezing the business rates multiplier, worth £4.6bn over the next five years.”