Energy suppliers have 'moral responsibility ' to help businesses - mayor
British energy providers have a “moral responsibility ” to renegotiate agreements with companies stuck on high fixed-price energy deals arranged last autumn during a historic spike in prices, according to West Midlands mayor Andy Street.
The call echoes a warning from the region's Chambers of Commerce that thousands of companies were struggling because they signed fixed contracts in the second half of last year when energy prices were at their peak � and have therefore failed to benefit from the recent downward trend in prices.
The government spent nearly £6bn subsidising business energy costs through the winter but has since switched to a much less generous successor scheme.
Street (pictured) said data from the region's Chambers showed that one in 10 companies in the West Midlands were now spending more than 20 per cent of their turnover on energy costs. “That is not sustainable.?So we need to say to the retail supplier, what is your moral responsibility to this? ”
He called on energy companies “to do the right thing and offer to renegotiate those contracts ” and if not he said the government should intervene again and provide businesses with generous targeted subsidies later this year.
“Our local Chamber of Commerce is saying that up to a third of our businesses could be paying up to five times as much as the market price. ”
“I 've got examples where manufacturing companies are already offshoring the production process in order to sustain themselves; this is about jobs right now. ”
Industry body Energy UK has said that while suppliers often support restructuring contracts where feasible, many energy companies have bought gas and electricity in advance � at the higher rate � when agreeing fixed-term contracts with customers.
The price of wholesale natural gas has fallen by more than 80 per cent since last autumn from a peak of more than £6 a therm to about 80p a therm.
But an estimated 93,000 companies face closure or cutbacks because their energy bills are still marooned on prices struck six months ago, according to the Federation of Small Businesses.
Street said it was hard to argue against the government 's support reduction given the need to protect taxpayer finances.
But he said there was an opportunity for the ministers to use existing schemes in a more targeted way for the most needy companies.
Raj Kandola, director of external affairs at Greater Birmingham Chambers of Commerce said: “Chambers across the region collected feedback from over 400 businesses in the region in order to gauge the challenges they are facing as energy costs continue to spiral.
“The findings were used in our latest report, The ongoing energy crisis - what does this mean for businesses in Greater Birmingham which has been shared with regional and national stakeholders including the West Midlands mayor, local MPs and leaders at Birmingham City Council.
“We are pleased to the see the mayor has backed our call for the Government to offer targeted support for those firms that are suffering from huge cost pressures as they struggle to pay their energy bills.
“Time is of the essence and we are calling on the Government to act decisively in order to give those businesses that are facing the prospect of job losses or even closure the support they need to emerge from this crisis on a surer footing. ”