Almost 7,000 independently owned convenience stores could be at risk of closure if the Chancellor doesn’t act in the Budget to target further support on energy costs, according to the Association of Convenience Stores (ACS).
It warned that convenience stores that signed fixed contracts during the height of wholesale prices in the second half of last year are those most likely to be at risk of closure, due to the tripling or in some cases quadrupling of their energy bills for the duration of the fixed-term contract.
Consultation with retailers and energy brokers suggests that these fixed terms typically last between 12 and 24 months. For an average sized convenience store facing rates of up to 95p per kWh, this would mean paying over £75,000 per year for electricity compared to annual bills of around £20,000 in 2021.
Government support provided for 12 months at the currently proposed level (1.9p per kWh) will reduce an average convenience store’s energy bill by around £1,520 for the year. In total, support provided by the government will equate to around £60m across the entire convenience sector.
The government support that has been announced to take effect from April will apply to all eligible businesses without any further targeting for those most in need. ACS has been clear to the government that this support is insufficient and does not go far enough to keep stores open.
ACS estimates that there are a total of 6,900 independently owned convenience stores that are currently stuck in excessive fixed contracts that are putting their businesses, as well as the jobs of over 46,000 colleagues, at risk. It says the proposed level of government support from April will barely make a dent in the viability of these businesses, and is not sufficient enough to keep them open.
ACS has estimated that the government can afford to provide an additional £10,000 per store this year, which at worst would be cost neutral in comparison to the tax losses that the Treasury would suffer if a store were forced to close its doors. The government can also significantly reduce the amount of money that it would need to support stores by requiring energy companies to allow businesses to get out of the fixed contracts that are clearly an anomaly.
ACS chief executive James Lowman said: “We have repeatedly warned the government that there are many convenience stores who simply cannot afford the increases that they are seeing in their energy costs and without additional support they may be forced to close their doors for good. The planned energy support for businesses from April is a scattergun approach that has failed to target support for those who need it most, and this must be urgently addressed.”
