Energy costs remain a threat to NI businesss this winter

Despite lower energy costs expected this winter, Advice NI says many businesses will continue to struggle and risk falling into energy debt as we brace for freezing temperatures and increased electricity usage during the colder months. The charity highlights the considerable challenge of energy costs for businesses is not accurately portrayed, with some businesses going into the winter months still facing energy debt from 2022. It’s reminding small businesses seeking expert advice as early as possible is crucial.

From 1 October, Ofgem’s energy price cap comes into effect in Great Britain. The price cap won’t impact Northern Ireland which instead has a ‘tariff review process’ where prices are overseen by a Utility Regulator. A recent review saw no change to the electricity tariff which is currently cheaper than Great Britain, yet despite a 7.56 per cent decrease from Firmus in the domestic gas tariff, customers across Northern Ireland are still paying around 30 per cent more.

Energy costs

The hospitality and independent retail sector may be hit hardest this winter, following recent figures from Nisra which revealed output in the service sector was down by 0.8 per cent in the last quarter. The statistics suggest slowdown in services was limited to retail and hospitality with sectors such as business services still growing.

Lara Thompson, Office and Accounting Manager at local hospitality business, A Peculiar Tea said, “Over the past two years our once-manageable energy bills have skyrocketed. When we first opened in January 2022 our electric bill was £180, we’re now facing monthly costs of upwards of £6,000 and it’s only going one way. As a small business, this surge has put immense strain on our financial resources and as the colder months begin, energy debts and costs will continue to put huge pressure on business owners.

“We’re also facing soaring costs for our produce, but compromising on the quality of our food or service is not an option. We certainly don’t want to close our doors but without timely intervention it’s becoming increasingly difficult for businesses like us to see a way forward.”

Although costs in Northern Ireland have been lower than Great Britain in the last year, energy costs remain a crippling expense for many businesses and some are still in energy arrears from last year, causing a lot of pressure explains Sinead Campbell, Head of Money, Debt, and Quality at Advice NI.

Sinead says, “Record numbers of businesses across Northern Ireland will continue to face energy related debt and large bills this winter, leaving them fighting for survival. And despite what will be a busy Christmas period for some, sectors like hospitality and retail will also be facing a very quiet first quarter in 2024.

“This year the business sector has faced persistent inflation, yet some business owners feel they can’t risk raising their prices out of fear of losing customers, meaning many will feel forced into building up arrears or borrowing money to keep up with repayments.”

National Energy Action (NEA) has also expressed grave concerns about the worsening situations faced by businesses and households, including higher direct debits without changes in usage, unaffordable debt repayment plans, and prepayment meters.

Sinead explains, “During April 2022 to March 2023, our service has seen an 85% increase in energy debt. This underlines the growing concern of the energy debt crisis, with businesses struggling with cash flow and paying for basic expenditures such as employee wages. Unfortunately, this means that many will turn to additional borrowing to ease their financial pressures. This can lead to further financial difficulty, and we encourage businesses at risk of debt or struggling during the winter months, to seek our help as soon as possible. It is important they know they are not alone, many are struggling right now and debt is nothing to be ashamed of.”

For businesses, debt can come in many forms such as rental arrears and missed creditor payments. Advice NI’s free and confidential Business Debt Service, provides straight-forward debt advice to help businesses understand and tackle these debts head-on. When a business owner calls the debt service, expert business debt advisers provide advice and information that will help them to gain control of their finances, and in many cases may be able to negotiate with creditors on your behalf.

In the past twelve months, Advice NI and its members have dealt with over 155 cases, managing over £7.8 million of business debt, signalling that there is often a solution.

Sinead adds, “Business owners can browse our website, www.adviceni.net/money-debt/business-debt, for full details of the service, and our Money Talks hub which offers a host of useful online business factsheets and letter templates, as well as tools and information such as a budget planner which can be useful for revenue forecasting and a comparison tool outlining energy supplier tariffs throughout Northern Ireland.”

Advice NI and the Independent Advice Network have 65 members and 300 advisers across Northern Ireland, all providing free, impartial and confidential advice. Struggling businesses can call  0800 915 4604 or by emailing [email protected]. where they can speak directly with an adviser between 9m and 5pm, Monday to Friday.