A key business organization has warned that many viable enterprises may face “distress” if the government does not take swift steps to control the energy cost situation.
According to the organization, HMRC should reintroduce the Time to Pay program, which provided businesses flexibility over when they might pay their taxes, and business rates should be frozen to prevent inflation-driven increases.
According to the Confederation of British Industry, firms were already feeling the pressure and could be driven to the brink by additional price increases.
It revealed survey results indicating that 69% of businesses anticipate an increase in energy costs during the next three months, with nearly a third anticipating hikes of more than 30%.
Nearly one-third of businesses surveyed by the organization concurred that rising gas prices are likely to discourage investments in the transition to net-zero emissions.
The CBI stated that the government should prioritize assistance to the most in need households and businesses.
It demanded that additional funds be allocated to the poorest under the existing energy bill assistance program.
It also urged HM Revenue and Customs to reinstate the Time to Pay scheme, which, during the coronavirus pandemic, allowed businesses to pay their taxes at their convenience.
The levy that businesses pay to their local governments, known as business rates, should be frozen for the upcoming fiscal year.
This would prevent inflation-driven price increases, which have risen in recent months, reaching a 40-year high of 10.1% in July, and are expected to grow further.
The CBI also advocated for a huge energy efficiency initiative that would provide citizens with up-front financial assistance for insulating their homes and aid energy-intensive firms in reducing their environmental imprint.
Matthew Fell, chief policy director of the CBI, stated, “The impact of skyrocketing energy prices on households would have severe repercussions, not only for people but for the entire economy.”
“Although assisting struggling customers is our top concern, we must lose sight of the fact that many viable businesses are under strain and may quickly collapse without intervention.
“The guiding principles for any intervention must be timeliness and targeting assistance to the households and businesses with the greatest need.”
He continued, “Companies are not requesting handouts. However, they need fall to be the time when the government addresses the energy cost situation.
“Now is the time to take decisive action to offer firms cash flow breathing room and prevent a short-term pinch from becoming a longer-term problem.
“Because companies are under pressure not to pass on increased expenses, there is a risk that important company investment will be suspended or stopped altogether.
This might represent a danger to the economic recovery and transition to net zero in the United Kingdom.
