Perthshire Chamber of Commerce has warned businesses are on the brink of collapse, as UK and Scottish Governments are urged to step in with vital crisis funding.
The organisation’s chief Vicki Unite has laid out urgent action plans for both administrations to combat looming energy price cap hikes for business owners and households.
These include business relief packages, cuts in VAT bills and the halting of some tax regulations.
Energy regulator Ofgem announced last week that the energy price cap increase will begin in October - with household bills to rise by an eye-watering 80 per cent.
A typical annual household gas and electricity bill will rise to £3549 a year from October, up from the current rate of £1971.
The price of electricity will rise on average from 28p per kilowatt hour (kWh) to 52p and gas will go up from 7p to 15p per kWh.
Analysts predict the price cap will climb even more resulting in a typical annual household bill of £5400 in January before hitting more than £6600 in April.
Chamber chief executive Ms Unite believes the impact on businesses and communities “must be tackled with immediate action”.
“The crisis has reached a tipping point and with so many on the brink, we cannot afford any more inaction,” she said.
“From the UK Government, businesses need to receive emergency support through grant funding, energy price caps and a reduction in VAT on energy bills. The Scottish Government must also take action within its powers to alleviate the cost burden on businesses and households, including pausing burdensome regulations and providing direct financial support.”
The Chamber’s Action Plan for the Scottish Government urges a Business Relief Package at a similar level of support during the pandemic.
The organisation also urges the Non-Domestic Rates (NDR) Revaluation that is due to take place in 2023 goes ahead as planned, without any further delay.
And its Action Plan proposed for the UK Government include temporary cuts in VAT bills to five per cent and introduction of an SME (Small and Medium Enterprises) energy cap.
The UK Government is also asked to review and reform the Shortage Occupation List (SOL) to help fill talent shortages.
Owner of Club 300 Gym and Personal Training in Perth, Mike Lindsay, called Ofgem’s announcement “worrying” adding: “We are on an energy cap until March 2023 through the Chamber of Commerce and energy broker ‘Here’s The Plan’, which looks after utilities.
“Our last conversation was that it should still be fixed for a few more months.
“All of our machinery are self-powered to save costs. But gas, electricity and water bills will go up and it will also affect customers’ pockets and so will affect the business.
“Some may cancel their memberships and reduce their personal training program – that is the bigger concern. We are in a good place for the moment but I would imagine more help is needed.”
Shaun Ward, who opened up his Perth Photo Lab store at the start of 2022, said he will “try to avoid” price hikes and says VAT cuts are vital.
“I am in the process of trying to hire another member of staff,” he said.
“But I am not sure how much the increase will be for us.
“Not knowing right now is the hard part and whether the government will step in.
“I am hoping they may reduce the VAT as a longer-term solution to give businesses some breathing space.
“[The funding packages] are a short-term fix and we should try to avoid them.
“Otherwise six months down the line there will be another crisis to fix.
“It is not just a crisis for businesses but a crisis for everyone.
“We will try to avoid price rises if we can and try to be practical in getting a balance.”
A Scottish Government spokesperson said: “The First Minister has committed to an emergency budget review to assess all opportunities to target additional resources to those most in need.
“At the same time, the Scottish Government will continue to do everything within our powers to help those most affected.
“There is dialogue with business leaders – including Scottish Chambers of Commerce network – who made clear the high cost of doing business in the UK is hampering their ability to recover following the pandemic and Brexit.
“Within a the restrictions of devolution, the Scottish Government has provided significant support.
“The Scottish Government supports the calls from businesses for measures related to energy prices, VAT reduction, staff shortages and handling business loans – desperately needed direct support that only the UK Government has the powers to deliver.
“Over the last 14 years, Scotland’s business community has had to weather a global financial crisis, a decade of UK Government austerity, Brexit, a global pandemic and spiralling energy costs.
“During that time, the Scottish Government has supported more than one hundred thousand small businesses across Scotland with rates relief of up to 100 per cent, saving them thousands of pounds a year.”
