Derby Liberal Democrats are demanding the Government rescue hundreds of small local businesses in Derby from soaring energy bills, warning that lack of action could see the area's high streets turning into "ghost towns."
Since businesses are not covered by the Ofgem energy price cap, many are expecting to see their bills skyrocket by 400% in the coming months.
The Liberal Democrat rescue package would offer grants up to £50,000 to help small businesses cope, giving them a lifeline to keep their doors open. The plans would benefit 4,051 small and medium-sized businesses in Derby, from family-owned high street shops to hairdressers.
This would include the 240 cafes, restaurants, pubs and other hospitality businesses in the city.
Under the proposed Liberal Democrat scheme, small businesses would be able to apply for Government grants covering 80% of the increase in their energy bills for one year, up to a maximum of £50,000. Nationally the proposals would help 1.4 million small businesses across the UK.
The party is also calling on the new Prime Minister to introduce laws to support families and businesses with spiralling energy costs as soon as Parliament returns next week.
The scheme would cost an estimated £10 billion and could be met by reversing the Conservatives' planned tax cuts for big banks, which are seeing their profits grow with rising interest rates. That would include cancelling the Government's cut to the Bank Surcharge that is due to take effect in April 2023 and restoring the Bank Levy to 2015 levels, raising £10.6 billion over the next four years.
Liberal Democrat spokesperson for business Cllr Ajit Atwal said:
"Derby's local high streets risk being devastated by spiralling energy costs and turned into ghost towns, but the Conservatives don't seem to get it or even care.
"Local shops, cafes and restaurants that survived through the Coronavirus pandemic, could now be taken down by soaring energy costs and forced to close their doors unless the Government steps up urgently.
"We need this energy bailout now to save our high streets, rescue small businesses and keep prices down for local families.
"We've known this hike was coming for months and the Government has done nothing.
"We cannot waste more time. The new Conservative Prime Minister must act immediately to protect families and small businesses in Derby as soon as Parliament returns."
Data on the number of small businesses by area is taken from BEIS. There are 1,408,325 businesses with 1 to 249 employees (micro, small and medium-sized enterprises) around the UK, all of whom would be eligible for the scheme.
Business energy bills are not subject to a price cap. Businesses renewing their energy supply contracts are seeing costs increase fivefold compared to bills in 2020 and a twofold increase compared to last year, according to energy experts Cornwall Insights.
The Liberal Democrats are proposing grants to cover 80% of the rise in energy bills for small and medium-sized businesses for one year, up to a maximum grant of £50,000 per business. For example, a typical medium-usage small business, such as a restaurant, which is seeing its bills rise by £12,500 a year would receive a grant of around £10,000.
Every year, energy broker and business services firm Bionic publishes data for typical SME energy prices and consumption. Figures are available here (2022, 2021, 2020). Bionic's data indicates that current energy prices for SMEs are 4 to 4.5 times higher (on average) than in 2020. Covering 80% of this price increase, taking into account typical prices and consumption for SMEs of different sizes, would cost an estimated £9.6 billion.