Energy sector is improving, but spare a thought for small businesses
One could be forgiven for thinking that Britain’s energy market is finally beginning to work in the way that it should. All six of the big energy providers have now cut their prices this year, passing on savings from lower wholesale prices to consumers. Data released last week, meanwhile, showed that six million households switched energy provider last year – a 15 per cent increase on 2014.
Unfortunately, someone hasn’t been invited to the party. Small businesses aren’t benefitting from lower energy prices, because the reductions unveiled by the Big Six apply only to the residential energy market. Most small businesses remain stuck on much higher – and fixed – tariffs.
And that switching data, which came from the industry regulator Ofcom, didn’t include small business customers. Ofgem isn’t saying how many of them switched last year, but you can bet And that switching data, which came from the industry regulator Ofcom, didn’t include small business customers. Ofgem isn’t saying how many of them switched last year, but you can bet ts final report won’t be published until June. Goodness knows how long its recommendations will take to implement.
In the meantime, small businesses continue to be held back by high energy costs The Federation of Small Businesses (FSB) says almost a third of its members now cite the cost of energy as a barrier to their growth and success. That’s worryingly high. Once they have acquired a small business’s custom, the energy companies don’t exactly bend over backwards to help them keep costs down – for example, only a fifth of the small businesses in the FSB’s survey say they have been offered advice on energy efficiency by their supplier.
In some ways, the energy sector appears to be getting worse. Energy companies have a right to object when customers say they want to move to a rival provider – but only in very specific circumstances such as when there are outstanding debts. Yet Make it Cheaper, a price comparison service aimed at the business market, says energy companies objected to 26 per cent of switching requests last year in the small business sector, up from 17 per cent in 2015.
Small business customers just haven’t been protected and supported in the same way as consumers they are still required to give formal notice to existing suppliers when looking to switch to a new provider – in the consumer sector, by contrast, the very act of applying to a new provider counts as an automatic serving of notice That sort of problem could be solved almost instantly were regulators to show willing. Similarly, that there is no requirement on energy companies to publish comparable tariffs in order to help small businesses find the best deals.
Certain businesses are hit disproportionately hard by these problems. In particular, sectors such as engineering and manufacturing – where policymakers are supposedly targeting support as the bid to rebalance the UK’s economy – are especially vulnerable because they have such high energy costs. High bills are eating into these companies’ margins and undermining their commercial viability.
Small businesses have been waiting long enough for change – let’s hope they don’t get forgotten.
Unfortunately, someone hasn’t been invited to the party. Small businesses aren’t benefitting from lower energy prices, because the reductions unveiled by the Big Six apply only to the residential energy market. Most small businesses remain stuck on much higher – and fixed – tariffs.
And that switching data, which came from the industry regulator Ofcom, didn’t include small business customers. Ofgem isn’t saying how many of them switched last year, but you can bet And that switching data, which came from the industry regulator Ofcom, didn’t include small business customers. Ofgem isn’t saying how many of them switched last year, but you can bet ts final report won’t be published until June. Goodness knows how long its recommendations will take to implement.
In the meantime, small businesses continue to be held back by high energy costs The Federation of Small Businesses (FSB) says almost a third of its members now cite the cost of energy as a barrier to their growth and success. That’s worryingly high. Once they have acquired a small business’s custom, the energy companies don’t exactly bend over backwards to help them keep costs down – for example, only a fifth of the small businesses in the FSB’s survey say they have been offered advice on energy efficiency by their supplier.
In some ways, the energy sector appears to be getting worse. Energy companies have a right to object when customers say they want to move to a rival provider – but only in very specific circumstances such as when there are outstanding debts. Yet Make it Cheaper, a price comparison service aimed at the business market, says energy companies objected to 26 per cent of switching requests last year in the small business sector, up from 17 per cent in 2015.
Small business customers just haven’t been protected and supported in the same way as consumers they are still required to give formal notice to existing suppliers when looking to switch to a new provider – in the consumer sector, by contrast, the very act of applying to a new provider counts as an automatic serving of notice That sort of problem could be solved almost instantly were regulators to show willing. Similarly, that there is no requirement on energy companies to publish comparable tariffs in order to help small businesses find the best deals.
Certain businesses are hit disproportionately hard by these problems. In particular, sectors such as engineering and manufacturing – where policymakers are supposedly targeting support as the bid to rebalance the UK’s economy – are especially vulnerable because they have such high energy costs. High bills are eating into these companies’ margins and undermining their commercial viability.
Small businesses have been waiting long enough for change – let’s hope they don’t get forgotten.