More support is needed
Date published:
Marianne O Sullivan, policy adviser, North East England Chamber of Commerce latest column for The Journal.
The Government has announced that all UK households will get a grant which will reduce their energy bills by £400 from October. This is a welcome step in supporting people through the cost of living crisis.
It’s positive to see some support for households and further help offered to the most vulnerable households facing rising energy costs. This is especially important in the North East where we have seen the UK’s biggest increase in child poverty from 2014/15 to 2019/20. The cost of living crisis is likely to have a further negative impact on vulnerable households so the targeted support is welcome.
However, more support is needed for businesses to prevent further inflationary pressures in particular for SMEs who are struggling with rising energy costs and no price cap.
Companies are facing an increase in this expenditure but also rising prices in raw materials and staff costs. In our last Chamber Economic Survey 89.3% of respondents said they were concerned about energy prices, this is a particular concern for the North East manufacturing sector and energy intensive sectors. The British Chambers of Commerce (BCC) has reported that 62% of businesses cite soaring energy bills as a driving factor in them raising prices.
Unless steps are also taken to ease business costs, they will likely feed into the inflationary pressure on the economy and lead to further price rises having a negative impact on households in the region.
Along with the BCC we have been campaigning for a reduction in VAT to 5% on businesses’ energy bills to directly alleviate some of the pressure to raise prices.
Ahead of our next Economic Survey we will be running roundtable discussions with members across the region to discuss what they are doing to reduce their energy usage/costs including investing in renewables, more energy efficient equipment, or trying to change employee behaviours. This will help us to gather information on what businesses are currently doing and what support they need to help them reduce energy consumption.
We will continue to work with our members and the BCC to campaign for a VAT reduction in businesses energy bills and further support from Government to reduce the cost of doing business.
Our view is that there needs to be an emergency budget to break the inflationary cycle.