SARAH MEDCRAF: Businesses are slogging up huge hill with no end in sight
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Shall we go out for a coffee? It’s cheaper than putting the kettle on!
Maybe the title exaggerates a little bit, but sadly, maybe it doesn’t. The energy crisis we find ourselves in is escalating exponentially and with this comes the (justified) fear for consumers.
A University of York study says that two thirds of UK households could be in fuel poverty (where energy costs exceed 10 per cent of a household’s net income) by January.
From a consumer perspective, a higher bill means turning the thermostat down, wearing extra layers, not heating rooms that aren’t being used and turning off electrical items when not in use to limit use.
But what does it mean for a business?
Well, they can’t turn the heating down or turn the lights off for obvious reasons, they need fuel to run their operations (whether that be a cooker, machinery or till) and their costs of just being open are rising.
We’ve been receiving reports from the hospitality industry that the average spend of consumers is down, with an increase in those choosing to share meals. Yet the cost to service that table is increasing from all angles.
The price of coffee has increased as has the price of food and staffing costs have risen. But there is a cap on how much any of us will/can afford to pay for a coffee and a scone. We know footfall is down due to hybrid working and the gap in the budgets between income and expenditure just grow and grow.
Ofgem are due to announce the rise of the energy price cap. But this is largely irrelevant to businesses as there is no cap for businesses, despite numerous asks from Chambers of Commerce and other business organisations.
We’ve spoken to some hospitality businesses who face price hikes of up to 400 per cent on their energy bills, on top of all the other increased costs of doing business. Their needs to be more support.
Support isn’t just in the form of grants (whilst they are welcome). There needs to be fundamental change to the way business is done. A reduction in VAT, a reform of non-domestic rates and policies relating to talent attraction and retention would improve the situation that many are in.
Businesses are slogging up a huge hill with no end in sight. Whilst many business leaders I know are fiercely innovative and stubborn, even the most experienced entrepreneurs are struggling. Change is needed now before it’s too late.
Whilst I appreciate we all are looking to tighten our belt, please remember to spend local, where you can.
Sarah Medcraf is chief executive of Moray Chamber of Commerce.
