Scottish firms facing 'enormous pressure' from energy prices

Rising energy costs are putting Scottish firms under "enormous pressure" and could lead to closures and job losses, business leaders have warned as they called for more UK Government support.

Dr Liz Cameron, chief executive of the Scottish Chambers of Commerce (SCC), said that many businesses are still operating in "survival mode" amid Brexit and the pandemic and are finding it impossible to keep pace with energy price rises.

Ahead of the UK Government autumn Budget, she has written to UK Chancellor Rishi Sunak, calling for the introduction of a small and medium enterprise (SME) energy price cap to protect Scottish businesses from the increasing price of gas and electricity ahead of the winter months.

The SCC has asked the UK Government to look carefully at this option as quickly as possible.

Dr Cameron said: "In the past few weeks, the UK has reached a crisis point over gas and electricity prices, and businesses are feeling the consequences.

"Many businesses in Scotland are still operating in survival mode and continue to recover from the dual challenges of the UK's departure from the EU and the impact of the global coronavirus pandemic.

"It's impossible for firms to keep pace with these exorbitant rises in energy prices and these cost pressures are putting many businesses under enormous pressure and resulting in these rising cost pressures increasingly being passed on to the consumer.

"The UK Government needs to support business recovery over the winter months and SCC believes there is now a clear case to create an SME energy price cap, including for microbusinesses, to protect smaller firms from some of these price increases which they would otherwise face."

In her letter to Mr Sunak, Dr Cameron said it is "essential" that the upcoming UK Budget focuses on economic recovery and recognises the "energy price crisis" that Scotland's businesses are facing.

She said: "Scottish businesses urgently require support to mitigate these rising costs that threaten recovery and could lead to the permanent closure of businesses and the loss of jobs across Scotland."

One Scottish hotel group, the Caithness Collection, which operates across the north Highlands, has reported a potential rise of £53,170 per year in electricity costs as it moves to a new contract, the equivalent to a 70% increase on its current yearly bill.

Andrew Mackay, owner of the Caithness Collection hotel group, said: "The hospitality sector was one of the hardest hit throughout the pandemic and recovery is already proving challenging, with difficulties finding and retaining staff, increased wage demands, other supply chain issues and tax increases.

"Rising energy costs are creating huge burdens and challenges for the business and it's vital that Scotland's businesses are afforded some buffer to guard against energy prices that are hitting them hard."

The SCC network comprises 12,000 member businesses and a network of 30 local chambers of commerce.

A UK Government Department for Business, Energy and Industrial Strategy spokesman said: "The Government is in regular contact with the energy industry and Ofgem to manage the impact of high global gas prices and will continue to monitor the situation incredibly closely, including the impacts for small and medium size businesses."

A UK Treasury spokesman said: "The Budget and Spending Review next week will set out how we will continue to invest in public services, businesses and jobs while keeping the public finances on a sustainable footing."