Soaring energy prices are likely to force small businesses across the country to close, business owners have warned.
A music studio owner told i that he had had to switch off all the overhead lights just to bring down the cost of his bill.
Steven Carrigan, 45, Kidderminster, owns Load Street Studios, which rents out studios and rehearsal venues to music students, teachers and musicians.
“We recently changed all of the lighting from high wattage fluorescent tubes to LED panels, which brought our electricity bills down by £200 per month, he said.
“Then the increase put them back up again. Now, with another increase, it’s making it very difficult to make any kind of decent profit.”
He said that the doors were open from 9am-11pm everyday which means all eight studios were “almost lit all the time.”
Mr Carrigan moved into his current larger premises at the beginning of this year, which are three to four times the size of the previous building. But it comes with a cost – higher rent.
“We were paying 22p per unit when we moved in. That increased to 45p and about to rise again to 54p,” he said.
“We’ve been working extremely hard to grow the business to come in line with the new higher overheard. It’s doing very well but with the energy costs rising as such a rate it’s really making it hard work.”
Studio hire is their main revenue stream with music lessons given by eight freelance music teachers who depend on the studio for income at close second.
“We’ve have a few [students] drop off and we’re currently trying to get funding in place so that those who can’t afford lessons can still learn under a scholarship programme.”
According to the Resolution Foundation think tank, the average household income is forecast to fall by 5 per cent in 2022-23, dipping a further 6 per cent in 2023-24.
They add that “a combination of earning stagnation and the energy shock means the country is on track for two lost decades of income growth.”
Mr Carrigan is trying to raise money to pay two full time teachers to deliver music lessons to children and teenagers from deprived backgrounds. However the number of music students that would qualify for this funding is growing at “an alarming rate.”
The coming winter will bring catastrophe for households who will not keep up with runaway prices. Experts saying it could ravage people with destitution and even cause deaths if government intervention does not arrive
“It’s just crazy that the government allows the energy companies to make so much profit”, Mr Carrigan said. “They need to step up the mark and do something about it as soon as possible.”
The Ofgem energy price cap only applies to domestic properties, but small businesses are calling for the Government to expand it to prevent thousands of enterprises from going under.
“I’ve got 43 members of staff that rely on my business to fund themselves – that’s a burden I carry. ”
Ed Collison, 27, an entrepreneur who runs The Deck and The Deck “On the Go” in Emsworth, a cafe-turned restaurant, told i he was worried he could lose everything.
His gas and electricity bill for a quarter stands at around £2,500; in the winter he can see that go from £3,000 up to £3,200.
His restaurant seats around 80 customers which, he told i, “is a lot of money for the size of the venue.”
But what concerns him the most is the further rise in energy bills this coming October, ratcheting up the financial burden.
“If it [the rates] goes in proportion to what is being projected this October, my bills will rise. We’re going from £2,500 to £6,500.
“Our industry relies on electricity and gas, we have extraction systems, ovens, fryers – they consumer a lot of units per hour. In the hospitality sector, in a small restaurant like ours, you’re seeing 2-8 per cent profit which isn’t a lot.”
But the call for the raise of minimum wage to £15 pounds an hour will strain his business further.
“We currently pay above minimum wage. £15 an hour is a decent pay in the hospitality sector. If £15 is the new minimum wage, then my staff’s wages will have to go up, so you’re talking around £24 an hour. I have 43 members of staff. That’s a 43 per cent increase in my wage bill if everything goes up pro rata. That’s a lot of money.”
He feels he is one of the luckier ones being situated in a relatively more affluent area with a majority of his customers in retirement and on sizeable pensions. He’s hoping that this will keep the restaurant lights on during the winter.
But as nothing is certain in the upcoming weeks – whether we will see more sufficient government support packages or not – he remains on a knife-edge about the survival of his business.
“I could lose everything. You never know,” he said.