The Welsh Government has called on the Westminster administration to provide urgent financial support to firms with the fear that many will go to the wall without intervention to address the spiralling cost of energy and fuel.
Economy Minister Vaughan Gething will tomorrow hold talks with Welsh business representatives to hear directly about the pressures they are facing. Unlike for consumers there isn’t a commercial cap on energy charges.
Mr Gething said:“The cost of living crisis engulfing the UK is having a significant impact on families across the country. We’re also facing a cost of business crisis, with businesses across Wales facing increasingly unbearable pressures because of soaring energy and fuel bills.
“Our businesses are the lifeblood of our communities. They provide the jobs people rely on for their livelihoods. As Wales’ Economy Minister, my immediate priority is to do what I can to protect our economy and the people who work within it.
“That’s why I am demanding that the UK Government steps up and takes immediate action now, by using the powers only they have at their disposal to intervene in this crisis. They must bring forward measures to reduce inflation and provide the significant additional help people and businesses need.
“Unless they act now, they risk inflicting significant harm on the Welsh economy. This cannot be allowed to happen.”
While its financial firepower is limited the Welsh Government cabinet is expected to consider what additional support it could provide firms. However, whoever is the next Prime Minister, which seems almost certain to be Liz Truss, a significant package of support will be needed not just for consumers, but businesses across the UK.
One option would be capping energy bills for consumers and firms with the additional real cost financed through new government bonds. However, this will add to the national debt and increase interest payments.
For those firms in Wales that have fixed their energy charges, those coming off deals are facing huge rises.
One such company is Newport-based office furniture firm Bisley. Its chief executive Richard Costin said: “As a relatively new CEO of a homegrown, heritage British manufacturing firm, I can clearly see that the current energy landscape in the UK has the potential to materially impact the energy intensive manufacturing sector.
“Our utility contracts were recently due to expire, and therefore we had to go to tender via brokers rather than be in a position to negotiate. As a result, our gas has gone up by 681% and our electricity by 303%.
Following the last two years of investment and turning our business from loss making to achieving a small profit, rises on this scale will wipe out hard-won profits, following an intensive two year efficiency drive. This new financial year we are on target to achieve a reasonable profit, the first time in many years.
Now, the vast majority of that hard work will go into energy costs, with the bulk of what remains used to support our employees with increases to help with the high cost of living.
"As an independently owned British manufacturing firm, outgoings on this level are entirely unsustainable, and without the changes that we have had to make over the last two years, who knows what position we would have been in now due to these increases?
While other UK manufacturers have off-shored production over the years, we have been resolute in our commitment to the proud ethos of ‘Made in Britain’, and stood firm against others who move operations overseas and import white labelled products which have been made outside of the UK.
But to what end? Bisley provides a global export offering to over 50 countries, all while the economy cannot do anything to support British manufacturing or manufacturers. At this rate, what happens to the iconic British manufacturing sector remains to be seen. Sadly, I am sure that it is inevitable that some firms will disappear entirely.”
The British Chamber of Commerce has also called for urgent action to support firms.
Director general of the BCC, Shevaun Haviland, said: “I have written to the Prime Minister, Chancellor of the Exchequer and both Conservative Party leadership candidates expressing my concern for businesses and households during these challenging times.
“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.
“The problems are well understood. We at the BCC are offering solutions. It is now over to the government to take action to protect businesses, livelihoods and jobs.”
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