Commons Sense

House of Commons · Westminster Hall

Energy Supply Market: Small Businesses

13 September 2023 · 6 other contributors · 8,049 words

Opened by Robin Millar Con Aberconwy

Responding minister: Amanda Solloway

EnergyBusiness & Trade

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Robin Millar raised concerns about energy supply market: small businesses in Westminster Hall. A government minister responded.

Key points

  • Concerns raised about the impact of rising energy costs on small businesses, with over 166,498 signatures gathered for a petition
  • Hospitality businesses in north Wales reported soaring energy costs, with electricity prices nearly two and a half times higher and gas prices three times higher than in May 2021
  • MPs urged the government to establish an energy hardship fund for small businesses and set up a dedicated helpline for cost management assistance

Key requests to Government

I urge the government to establish an energy hardship fund specifically for small businesses and set up a dedicated helpline where they can seek assistance in managing their costs. The fund should be operational by October. Millar urges the Government to encourage suppliers to work directly with hospitality businesses to resolve issues with high fixed prices. He also calls for Ofgem's recommendations to be implemented urgently: greater transparency for customers, timely complaint responses, wider access to the energy ombudsman, measures against sector blacklisting, and improved regulation of brokers. I urge the Government to step up and offer grants covering 80% of the increase in energy bills for one year, up to £50,000. The Government should also accelerate the review of electricity market arrangements to decouple electricity from wholesale gas prices, improve energy efficiency in buildings, and provide financial support for installing renewable sources.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Robin Millar Con Aberconwy

I am concerned about the impact of rising energy costs on small businesses in my constituency. According to figures, over 166,498 signatures were gathered for a petition highlighting the need for urgent support. Many businesses are struggling with unprecedented hikes, facing potential closure without immediate intervention. Tourism and hospitality businesses in Robin Millar's north Wales constituency are facing soaring energy costs, with average prices doubling between 2022 and 2023. The MP heard from Dave Faragher of Wild Horse brewery that electricity costs nearly two and a half times more than in May 2021, and gas costs three times more. Hospitality businesses also reported issues such as refusal to quote, increased prices with risk premiums, excessive deposits, inflexibility, lack of transparency, and refusal to renegotiate contracts at the peak of price spikes. I am concerned about the impact of rising energy bills on small businesses in Bath. Several companies have expressed disappointment that the Government removed energy support, with one pub's bill increasing by £35,000 and only receiving a reduction of £3,000 instead of £30,000 under the previous scheme. Suppliers note that some companies may become unsustainable without further support, as 15% fear collapse within the next year due to energy prices being a significant contributor.

Other contributors (6)
  • Dominic Raab Con Torbay and South Devon

    I suggest that SMEs can turn into suppliers by installing renewable sources such as solar panels to reduce bills and provide support for the local grid. Esher Theatre is an example of this in my constituency.

  • Jim Shannon DUP Strangford

    Mr. Shannon highlighted the dramatic increase in energy prices affecting local businesses, particularly in the hospitality sector. He mentioned specific examples of increased electricity bills for a new Japanese restaurant to £84,000 annually and another business to £12,000 monthly. The speaker also noted that UKHospitality estimates an average doubling of energy prices paid by hospitality businesses between 2022 and 2023.

  • Kerry McCarthy Lab Bristol East

    Hospitality businesses, especially in Bristol, face severe challenges due to sky-high energy bills and other financial pressures. An independent bakery struggled with a massive increase in its energy bill and resorted to using a noisy generator, while an independent café was denied service by suppliers because it is not a significant customer. Kerry McCarthy called for reforms to the market to ensure that small businesses receive fair treatment and access to low-carbon energy at affordable prices.

  • Kevin Foster Con Torbay and South Devon

    Tourism is a critical part of Torbay's economy, facing significant challenges due to high energy costs. A survey revealed that businesses are paying between 19p and 76.3p per kWh for electricity, with some experiencing increases over 500%. Many businesses reported difficulty in renegotiating contracts and faced 'take it or leave it' deals from brokers. There is a need to consider extending access to the energy ombudsman and regulating brokers due to instances of sharp practices.

  • Patricia Gibson SNP North Ayrshire and Arran

    Wholesale energy prices are falling, but many businesses remain on high-cost fixed contracts from last year's peak. Patricia Gibson highlights that Scottish small firms could be forced to close due to reduced support for energy bills. She cites 93,000 companies at risk and emphasises the need for more flexible contracts to benefit from price reductions. The hospitality sector is particularly affected, with energy prices surging by 81% in a year.

  • Yvonne Fovargue Lab Makerfield

    I highlight the urgent need for financial support to alleviate the pressure on small enterprises affected by soaring energy prices.

Government Response

Amanda Solloway

It is a great pleasure to serve under your chairmanship, Ms Fovargue. I thank my hon. Friend the Member for Aberconwy (Robin Millar) for securing this incredibly important debate and I thank all who have taken part. The energy crisis has impacted households and businesses alike, but the non-domestic market has remained more stable than its domestic counterpart due to different supplier hedging strategies, risk sharing with customers, and bespoke contracts for businesses. Despite difficulties faced by businesses with energy bills higher than historical norms, the Government provided £7.4 billion of support under the Energy Bill Relief Scheme (EBRS) for over 1.9 million energy contracts. However, this level of support was unsustainable long-term. The new Energy Bills Discount Scheme supports businesses until April 2024 and limits taxpayer exposure to volatile markets. Additionally, the Chancellor announced a £13.6 billion package to reduce business rates burden over five years, including freezing the multiplier for another year and increasing relief for retail, hospitality and leisure from 50% to 75% up to £110,000 per business. The Government encourage suppliers to provide clear communications to customers about contract options, blend and extend offers, and entitlements under the EBRS and new scheme. Specific concerns were raised about the hospitality sector; however, we will continue to press suppliers to treat businesses based on individual circumstances. Ofgem's review into the non-domestic market proposed regulatory changes to improve customer service and support from energy suppliers and third-party providers. We plan to consult stakeholders before implementing any final changes. The Government are committed to improving the retail energy market for all consumers while ensuring a resilient and investable state that supports system transformation.

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