FT - James Lowman, chairman, ACS

ACS chief executive James Lowman

The Association of Convenience Stores (ACS) has written to the Chancellor calling on the government to take emergency action to deal with the spiralling cost of energy.

According to ACS it will cost convenience stores at least £2.5bn this year.

For an average small convenience store at around 1,000sq ft, it says energy costs have increased to more than £45,000 a year, more than doubling for many retailers that have renewed their contracts in recent months. It adds that for larger stores of around 3,000sq ft, these costs can be in excess of £100,000 a year.

ACS chief executive James Lowman said: “The government needs to understand that this is an emergency. Thousands of convenience stores will be forced to make extremely difficult decisions in the face of tens of thousands of pounds of additional energy costs in the coming months, which at best will include cancelled investments, reduced staff hours and increased prices in stores, pushing up inflation even further. For some however, the cost of energy will make the business unviable, and so they will be forced to close unless action is taken to provide meaningful support.”

ACS is calling for urgent action to help retailers keep the lights on this winter, urging the government to introduce a £570m rescue package made up of the following interventions:

  • Introduce a price cap on electricity for small businesses in line with the cap that is already in place in the domestic market (set for October 2022 at 52p per kWh for electricity). This should be applicable to all businesses that meet any of the criteria set out in Ofgem’s microbusiness definition, which are: a) fewer than 10 full time equivalent employees, b) electricity usage of less than 100,000 kWh per year, c) gas usage of less than 293,000 kWh per year, d) annual turnover of less than £1.7m per year.
  • Scrap business rates bills for all convenience stores from 1st October until the end of the financial year. The Government is currently supporting retailers through a 50% reduction in their business rates bill through to the end of the 2022/23 financial year, but we are calling for further action to increase that relief to 100%.
  • Freeze the business rates multipliers in 2023/24. The annual increase in the business rates multiplier is determined by the September rate of CPI (unless there is Government intervention). Currently, the September CPI rate is on track to reach 10%, resulting in a massive increase in rates bills next year. We are calling on the Government to continue to freeze the business rates multiplier, as they have since 2020.

Lowman added: “We have been calling on Ofgem for years to ensure that small businesses are treated in the same way as domestic consumers when it comes to their energy. A small business energy cap would take a huge step toward this goal, and protect thousands of retailers from the biggest annual cost increases in living memory.

“Taken together with additional business rates support, this package is absolutely necessary to support the UK’s 48,000 convenience stores as we head into an extremely difficult time period.”