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Small business group calls for energy price regulation

Small businesses are struggling to deal with spiralling inflation, with rising energy costs proving the most damaging, according to a new report from the Forum of Private Business (FPB).

The business group is calling for the introduction of a new code of conduct, which will govern the way in which utility companies deal with small businesses. This would include a cap on back billing, and fairer contracts to ensure that firms are not moved to more expensive contracts without their knowledge.

In conjunction with Ofgem and the Energy Retailers Association, the FPB is working to produce guidelines which will reduce the impact of back billing. Where micro businesses have taken all reasonable steps to avoid being back billed, energy companies would be required to limit retrospective charges to three years for electricity bills, and a negotiated period for gas bills.

The FPB’s research suggests that 94% of members have seen an increase in their energy bills, while 92% have experienced an increase in transport costs, and 82% have seen the cost of raw materials rise. Many of these firms reported that rising costs have impacted on staffing costs and inhibited growth.

Phil Orford, FPB Chief Executive, said, ‘We need small and micro businesses to be given better protection from practices such as back billing. A robust code of conduct policing the activities of energy companies would be a step in the right direction’.

The report also suggests that the UK should replicate the German model of the ‘Mittelstand’, where specific support is given to medium-sized businesses.

‘I want the UK to have its own version of the German ‘Mittelstand’ - a backbone of medium-sized firms which export, innovate and generate growth,’ said Cridland. ‘These future champions would help the UK weather unexpected economic shocks, and act as a new engine for growth.’

He continued, ‘To achieve extra growth, medium-sized firms must have access to new kinds of finance. This means opening UK bond markets to medium-sized businesses, encouraging use of venture capital, and making it easier for large companies to invest in medium ones, possibly in their supply chains.’

Responding to the report, a Department for Business spokesperson said, ‘We welcome the CBI's focus on the UK's mid-sized companies […] The Government is already focused on this group as part of the growth review, and we will be setting out our proposals alongside the autumn statement in November’.