Energy bills are a significant concern for 80% of UK business owners

82% of business owners are concerned about the price of energy and the impact it will have on their companies. Energy bills could potentially rise 133% as Government support for non-household energy bills ends and fixed market deals come to an end.

The government's assistance for non-domestic energy bills has seemingly dissipated, with the Energy Bills Relief Scheme coming to an end. And businesses are preparing for an increase in energy prices due to a lack of available support. 

As this support comes to an untimely end, the hospitality industry alone is set to face a £7.3 billion rise in energy bills, according to UK Hospitality. In the first three months of 2023, more than 150 pubs closed - almost two a day - as costs became too high to continue operating. In 2022, 386 pubs closed. A bleak forecast If the trend of pub closures so far this year continues.

A survey of 843 UK business owners conducted by Finbri, found that 61% of owners expect their energy costs to increase. The combination of fixed deals ending and the removal of government support could increase energy bills for businesses by more than 133%, according to Cornwall Insight. 

The issue of energy bills is one that affects the majority of businesses, regardless of industry, size or location. And the facts remain clear - energy prices are increasing and unlikely to fall this year.

Finbri, a business bridging finance broker, comments: “During the past year, the energy crisis has squeezed companies, resulting in hundreds of closures. With the end of government support and the introduction of a new cap, businesses are facing an uncertain future with rises in energy costs.”

Rising Business Costs

In addition to rising energy costs, businesses in the UK are suffering due to increases in business rates and the overall rising costs of operating a company.

Labour shortage: 83% of business owners were strongly concerned or concerned about the effects of labour shortages on their businesses. The Centre for European Reform (CER) and UK in a Changing Europe recently collaborated to produce a joint set of findings that found that Brexit has led to a shortfall of 330,000 people in the UK labour force. Accommodation and food services have been impacted the most, with 35% of businesses reporting a shortage in workers, followed by 21% of construction firms.

In the Spring Budget, the chancellor announced plans to improve labour availability for businesses, aiming to get thousands of people back into work. The reforms, which target disabled people, those with long-term health conditions, parents, the over 50s, and people on Universal Credit, are designed to make it easier for them to re-enter the workforce.

Supply chain issues: 71% of business owners are concerned about supply chain issues and how they may affect their business. Finbri’s survey found that certain industries, such as manufacturing, retail, and wholesale businesses, were the most concerned about supply chain issues.

Lack of government support: Some business owners will argue that the government has done little to help with the rising energy costs. This has been compounded by the end of the Energy Bill Relief Scheme and, under the new Energy Bills Discount Scheme, a business is not eligible If their energy costs are below £302 per MWh for electricity and £107 per MWh for gas.

Strategies businesses could employ to reduce energy costs 

  1. Switch Energy Providers: By switching to a different energy provider, businesses can save up to 45% on their energy bills. If you're seeking ways to bring your overheads down and your business consumes a lot of energy, comparing energy providers might be a good place to start.
  2. Install Energy-Saving Technology: Businesses can install energy-saving technology such as LED lighting and smart thermostats in order to reduce their energy consumption and lower their bills.
  3. Reduce Energy Consumption: Businesses can reduce their energy consumption by turning off lights and appliances when not in use, as well as using more energy-efficient equipment. 
  4. Negotiate with Suppliers: Businesses can negotiate with suppliers for better rates and more favourable terms. 
  5. Utilise Renewable Energy: By investing in renewable energy sources such as solar, wind, and hydro-power, businesses can reduce their carbon footprint and energy costs.

Utilising government schemes

The newly launched Energy Bills Discount Scheme (EBDS), replaces the Energy Bill Relief Scheme and runs from April 2023 to March 2024. Businesses are able to get the following discount of their energy bills: 

  • £19.61 per MWh for electricity 
  • £6.97 per MWh for gas 

With a £5.5 billion support package, the EBDS will help businesses for another 12 months. The UK government has also proposed measures to encourage the use of low-carbon technology that allows businesses to manage their energy costs, this includes; installing heating and lighting timers, lowering the temperature of boiler flow, and changing light bulbs.

Will energy bills continue to be a top concern for business owners?

Energy bills are a major concern for 80% of UK business owners. Government support for non-household energy bills has ended, and businesses are expecting a rise in energy costs due to a lack of available support. A survey of 843 UK business owners found that 61% of owners expect their energy costs to increase. 

Kate Nicholls, chief executive of UKHospitality, said: “The energy crisis has suffocated businesses over the past year, causing thousands to fail and forcing many more to take drastic measures to afford extortionate energy bills.

With energy costs set to increase, energy bills will remain one of the top concerns for business owners in the UK. Businesses that fixed their energy contracts in 2022, will see prices revert back to the 

The UK government has provided some relief through the Energy Bills Discount Scheme, however, this is only for 12 months and businesses must be mindful that their bills could rise again once it ends. Energy bills will remain a top concern for business owners in the UK for the foreseeable future.