Calls for emergency government grant and cut in VAT to tackle energy crisis

Business groups have called for the introduction of Covid-style emergency grants and a cut in VAT as part of a package of measures to help firms survive spiralling energy costs.

The Confederation of British Industry (CBI) said many viable businesses would be pushed into crisis this winter unless the government acts.

More than two-thirds (69%) of firms expect their energy costs to increase in the next three months, with almost a third anticipating rises of more than 30%, according to a CBI survey.

Energy intensive industries and small businesses are particularly at risk without government intervention, said the CBI.

The Federation of Small Businesses issued a similar warning and said there was a “cost of doing business crisis” with 89% of small companies facing higher costs compared to a year ago.

Many small firms are having to close on certain days to save on energy bills, it warned.

The British Chambers of Commerce (BCC) has written to the prime minister, Chancellor and both Conservative party leadership candidates calling for more powers to be given to energy regulator Ofgem to regulate the market for businesses.

It has also called for a cut in VAT, the introduction of a Covid-style emergency government grant, a reversal of the rise in national insurance and a review of the Shortage Occupation List to ease staffing pressures.

Shevaun Haviland, director general of the BCC, said: “Good business is good for our communities, and we must support firms and the individuals that run them to ride out this economic storm.

“In June, we gave the Government until the Autumn budget to get its house in order, but the latest economic projections released since then have been worse than expected. We simply cannot afford to see another month of the same old news.”

Hospitality operators have called for a commercial cap on energy prices, with some warning they could face permanent closure after seeing price hikes of over 500%.

The Caterer has heard some rural hotels are considering closing for the winter rather than try and trade with sky-high energy costs.