More than 1m UK small businesses ‘trapped in high-cost energy tariffs’
More than 1m small businesses may be paying energy bills significantly above market rates after becoming trapped in long-term contracts fixed when prices reached a historic peak last year.
Trade groups representing businesses from metalworkers to convenience stores have joined forces to warn of a “perilous situation”.
They are calling on ministers to force suppliers to renegotiate unaffordable energy deals struck last summer or risk thousands of insolvencies that would hit jobs and the UK economy.
Around a quarter of the UK’s 5.5m small businesses – over 1m companies – may have been forced to renew their long-term energy supply contracts at the peak of the market, according to separate surveys from the British Chamber of Commerce (BCC) and the Federation of Small Businesses (FSB), including through coercion or mis-selling.
At the time many small firms struggled to find an energy deal because suppliers either refused to supply small businesses or demanded large financial deposits.
Since then market prices have fallen, and on 1 April the government cut its financial support for business, but companies are still locked into long-term contracts that will force them to pay inflated prices based on last year’s peak for months or even years to come.
In a letter to the business secretary, Grant Shapps, seen by the Guardian, the Confederation of British Metalformers (CBM) described the situation as the “biggest mis-selling scandal since PPI”.
Stephen Morley, the president of the CBM, said small manufacturers faced a “perilous situation” which could put “another nail in the coffin of the British manufacturing sector” while energy suppliers and brokers make “huge profits at the expense of UK competitiveness”.
The warning emerged weeks
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