Business week in brief: 5th April 2012
Energy, the Budget and what it really means for your business
by Liam Clark
As one of the largest players in today’s business energy brokerage market, we were very interested in George Osborne’s plans for the industry in last month’s budget.
As the Department for Energy and Climate Change becomes more and more relevant to the future of our economy, government decision makers and regulators are assuming pivotal responsibility for protecting the interests of UK businesses, and energy costs can play an important role in our ability to compete through times of austerity and global competition.
When a government budget is announced the simple fact is there are several veiled decisions that can directly affect the revenue streams in your business. Within George Osborne’s claim to “unashamedly back businesses” in this year’s budget, there are certainly signs that this will extend to the energy sector.
As an example, measures to protect North Sea Oil & Gas operators from tax hikes have been assured by the chancellor, and projects to continue increasing gas storage capabilities in the UK confirmed. In theory, although the energy market is now driven by global influences, this shows intent by George Osborne to tackle rising market rates through sustainable policy.
So, potentially you’ve saved in the long run. Admittedly not a done deal, but reason for optimism.
On the flip side, there are still many baffling policies and procedures in the energy market that are yet to be tackled by this, or any other government. From my perspective, perhaps the most frustrating are the restrictive contract termination periods and the barbaric out-of-contract rates that energy suppliers are able to apply to all businesses. There is no industry standard on this but some, including the Big Six, require you to terminate your business energy contract 90 days before the actual end of that contract. Other requirements vary, but 28 days is the absolute minimum on the market today.
Now on some level this is understandable. As with any business, energy suppliers are required to manage their workflow and need time to process all the information associated with a transfer. But 90 days to acknowledge you want to leave? This has to be considered a reach and can only benefit the supplier. Energy Execs will argue that the whole episode of transferring an energy supply represents such a risk to them that they have no option but to implement such strategies. In reality, such regulation is lenient toward energy companies and is very a useful mechanism for keeping customers; usually on rates 20-30% above what is available on the market, so you’ve just handed that saving back to the energy supplier.
We’re trying to change this. We believe that businesses deserve the flexibility to change their energy supplier on fair and competitive terms, and without the risk of unjustifiable rate increases separate from market trends.
In the meantime the following points should prove useful:
1) Pay attention to terminating your contract – If you miss the window you are likely to end up on higher rates than those available to you. The best policy is to read the renewal information provided by your supplier in detail, set reminders on important dates, and keep evidence of termination whether on email or through recorded delivery.
2) Don’t be a passer-by – Saving on your energy costs through a broker can hand your business a competitive advantage.
3) Watch this space – We are committed to promoting competition in the energy industry, and we will keep applying the pressure until you get the flexibility you deserve.
For businesses focussed on cost-efficiency, the savings you can make on energy through a broker can make a real difference. As industry experts, we are a good place to start.
Business week in brief: 30th March 2012
Business week in brief: 23rd March 2012
Budget 2012: a 5 minute summary for businesses
As a business, we focus on generating real savings on your bottom line, so we thought it would make sense for us to give you a breakdown of how yesterday's Budget might have an impact your business.
Tax and VAT
Corporation tax to be reduced
Corporation tax will be reduced to 24% with the overall aim to reduce to 22% by 2014.
Simplified tax system
New simplified tax system for more than 3 million small businesses with an annual turnover of up to £77,000.
Higher rate reduction
From April 2013 the higher tax rate will be reduced from 50% to 45%.
Tax free allowance
The tax free allowance will increase to £8,105 this April and will rise to £9,205 next April.
Boost to business
Lower interest rates
Lower interest rates will be passed on to small businesses through the National Loan Guarantee Scheme.
Support for young entrepreneurs
The government is considering introducing Enterprise Loans to encourage business start-ups amongst young entrepreneurs.
Faster broadband connections
Ultra-fast broadband and wifi will be funded in ten of the UK’s largest cities.
Relaxed Sunday trading
Legislation to be introduced to relax Sunday trading laws for eight Sundays around the Olympics.
State pension age review
Automatic review of state pension age to ensure it keeps pace with increasing lifespans.
Higher rate relief
No change to pension relief for higher rate tax payers.
No change to fuel duty
No change to existing plans on fuel duty - the planned 3p rise in August will go ahead.
Vehicle excise duty
Vehicle excise duty to rise by inflation, but frozen for road hauliers.
So, in a nutshell this Budget has some good headline measures that will support business and growth, that is if you ignore the 3p rise in fuel duty. But let's face it,that isn't new news - we just hoped George Osbourne might have had the common sense to ease off a bit, inflation definitely going to be a concern now.
Let's just hope it's enough to keep the us safe from the double dip which is continuing to knock on the door.
The National Loan Guarantee Scheme: the death of Project Merlin
Today sees the start of another new scheme from the Chancellor in an effort to get the wheels of British commerce moving again - the government's National Loan Guarantee Scheme.
Over the next six months the government plans to make a select few banks provide cheaper loans to SMEs. Cheaper means that the banks will offer a decrease in around 1% on the APR they had previously been charging.
How does the scheme work?
Well, under the terms of the National Loan Guarantee Scheme, government backing will allow the few banks to borrow more cheaply in the wholesale money markets. So basically because the tax payer is being a guarantor to these loans the banks get the money more cheaply.
The Chancellor said the full benefits of lower interest rates would be passed on to businesses, many of whom have been unhappy since the start of the financial crisis five years ago about the availability and cost of borrowing.
Five banks – Barclays, Santander, Lloyds, RBS and the much smaller Aldermore.
What about HSBC?
Because HSBC is much stronger and more stable than the other banks involved it's already able to take advantage of the lower interest rates which will now be available to the others. So HSBC already has access to cheap credit but isn't making that available to businesses. What will make it start now, surely not just some competition?
Some might argue that this new scheme goes to show what a complete flop Project Merlin turned out to be. Banks didn't do enough then to help small businesses before and what will change now? In truth, I'm not quite sure. Trading conditions are still tough and there isn't a desire to take onboard lots of debt which arguably caused this problem in the first place.
But one thing is for for sure. The government believes our economy can still borrow its way out of trouble. Wise? Only time will tell.
Business week in brief: 16th March 2012
Business week in brief: 8th March 2012
Business week in brief: 2nd March 2012
Why we’re supporting Get Britain Trading
Today the Forum of Private Business (FPB) is launching its get Get Britain Trading campaign.
The idea behind Get Britain Trading is to raise awareness of the huge contribution that small businesses make to the UK economy, and also to lobby the government to take action to support these firms.
This year, the campaign is focusing on five specific areas:
1) Improving cashflow
2) Making tax simple and proportionate
3) Creating employment and improving skills
4) Reducing business costs
5) Creating opportunities for growth
We think the campaign is a great idea and we’re proud to champion small businesses. We can all provide specific support on two of the areas of focus this year too: improving cashflow and reducing business costs.
How? Well, many businesses don't pay much attention to their business energy contract; it's just one of those costs that you have to pay. However, you can make significant savings by switching your business electricity and gas. We save businesses with low energy consumption an average £320.70, those with medium consumption an average of £706.66 and those with high consumption an average of £1774.67.* If you don't shop around for your business energy each time your contract comes up for renewal, that's money you're needlessly throwing away, year in, year out.
We can also help you improve your cashflow, by making sure you get the right billing and payment plan, or account management options. It could be something as simple as setting up Direct Debits which give you a discount on your bill, or signing up for an online account where you can give meter reading online so you get accurate bills. We could also help you get a smart meter so you don't have to worry about meter readings or checking bills, and get you access to data about your energy consumption online which can help you be more energy-smart.
We’ll save you time too. It’s a cliche, but when you’re running a business, time really is money. And let’s face it, business energy isn't very exciting - no one wants to spend hours online or on the phone getting quotes from different suppliers. With us, all it takes is one phone call to compare prices from across the market, and we can handle the paperwork and admin too.
You can get involved in Get Britain Trading too:
- Join the campaign;
- Play a part in the discussion on LinkedIn
- Follow the FPB on Twitter and use the #BritainTrading hashtag
*Average savings for all businesses switching their gas and/or electricity with uSwitchforBusiness.com for the period January- November 2011. Low users are classed as using less than 19,000 kWh a year, medium users 19,000-49,999 kWh a year and high users 50,000 kWh a year or more.
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- Ed Miliband and the Queen talk energy
- Interview with Steve Fitzsimons of new business energy supplier, Hudson Energy
- Business week in brief: 4th May 2012
- The see saw of corporate profit
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- EDF Energy’s Business Customer Commitments: four key pledges
- Businesses buck the trend when it comes to smaller energy suppliers