The Association of Convenience Stores (ACS) has put a series of suggestions to the government to help small businesses deal with the rising cost of energy.
The ACS estimates that the “spiralling” cost of energy will cost the convenience sector at least £2.5bn this year. It calculated that for an average small convenience store at around 1,000sq ft, energy costs have risen to over £45,000 a year, more than doubling for many retailers that have renewed their contracts in recent months, while for larger stores around 3000 sq ft, these costs can be in excess of £100,000 a year.
In a letter to the Chancellor, urging emergency action to support convenience stores, it outlined interventions that could be put in place to help struggling retailers:
- Introduce a price cap on electricity for small businesses in line with the cap that is already in place in the domestic market (set for October 2022 at 52p per kWh for electricity). This should be applicable to all businesses that meet any of the criteria set out in Ofgem’s microbusiness definition, which are: a) fewer than 10 full time equivalent employees, b) electricity usage of less than 100,000 kWh per year, c) gas usage of less than 293,000 kWh per year, d) annual turnover of less than £1.7m per year.
- Scrap business rates bills for all convenience stores from 1 October until the end of the financial year. The Government is currently supporting retailers through a 50% reduction in their business rates bill through to the end of the 2022/23 financial year, but we are calling for further action to increase that relief to 100%.
- Freeze the business rates multipliers in 2023/24. The annual increase in the business rates multiplier is determined by the September rate of CPI (unless there is Government intervention). Currently, the September CPI rate is on track to reach 10%, resulting in a massive increase in rates bills next year. We are calling on the Government to continue to freeze the business rates multiplier, as they have since 2020.
ACS chief executive James Lowman said: “The Government needs to understand that this is an emergency. Thousands of convenience stores will be forced to make extremely difficult decisions in the face of tens of thousands of pounds of additional energy costs in the coming months, which at best will include cancelled investments, reduced staff hours and increased prices in stores, pushing up inflation even further. For some however, the cost of energy will make the business unviable, and so they will be forced to close unless action is taken to provide meaningful support.”
Lowman urged the government to introduce a price cap for small business customers, similar to that implemented for domestic customers. “We have been calling on Ofgem for years to ensure that small businesses are treated in the same way as domestic consumers when it comes to their energy. A small business energy cap would take a huge step toward this goal, and protect thousands of retailers from the biggest annual cost increases in living memory. Taken together with additional business rates support, this package is absolutely necessary to support the UK’s 48,000 convenience stores as we head into an extremely difficult time period.”
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