The new price cap, announced this morning by Ofgem, will see those using a typical amount of energy paying £300 a month.
The impact of this news is devastating for so many families across the country, struggling to afford the simple basics in life. Our business community face equally desperate times. It is not just the cost of living that is spiraling out of control, it is the cost of doing business.
Businesses are faced with escalating costs from every angle. The rise in energy bills is just the latest challenge facing businesses as they desperately try to recover from the impact of the pandemic. Rising costs of supplies such as fuel, cooking oil, ingredients, wage inflation and pressures in recruiting staff combined with more static costs such as rent, and business rates come at a time when consumer confidence has hit an all time low.
In August, GfK’s Consumer Confidence index reported consumer confidence hit a record low due to the soaring cost of living and declining economic growth. As consumers are faced with the rising cost of living, they are watching every penny, and with the situation expected to get worse before it gets better, the knock-on effect to our business community will be devastating if it is not supported. Recent reports suggest that prices have risen at the fastest rate in 40 years in July and that the UK is heading for a recession.
Concerns from representative bodies and the business community have been in plentiful supply as we approached the announcement of Ofgem’s price cap increase. The BBC reported only last night that expectations would see an energy price cap of £3,600 announced – a mere £50 out.
While I appreciate that HM Treasury, the Exchequer, and various think tanks are working through new ideas, possible changes to current policy and the introduction of new policies, my mind wanders immediately to the ‘too little too late’.
As a country we seem to be sleep walking into and through the cost-of-living crisis. This is by no means a political statement. It feels just given the lack of progressive and pro-active action being taken by our political leaders on both sides but clearly the Government in managing a situation that will have disastrous consequences for us all, and in reference to this article, our business community and economy.
How our new Prime Minister will address the cost-of-living crisis is, now, I feel, anyone’s guess.
For many of you that know me, I am always keen to look past the issues and challenges and consider the opportunities and possible solutions.
What is clear is that businesses need all the help they can get right now. For many, the cost of living, the latest in a string of crises will tip the balance and leave many with no choice but to close their doors. In doing so, our high streets will see our communities blighted with their heart and souls removed.
We need action and we need it now. We need a roadmap, a strategy that considers the short, medium and long-term recovery from this dire situation.
Yes, business grants would certainly support businesses now, relieve the growing pressures and allow businesses the chance to deal with the impending rise in costs. The mechanics are in place to deliver these through local authorities.
The rate of VAT can and should be reduced in my opinion to allow businesses breathing space, to prevent the passing on of rising costs to the consumer and help stabilise the economy before it is too late.
Collectively, more is required from our top 10 energy providers. Greater, more significant financial interventions that divert a proportion of the profits into supporting all pockets of society including our business community at large.
We must have action and we must have it now.