Businesses and households across Scotland and the UK face severe hardship this winter, with rising food, fuel, energy costs and rampant inflation continuing to take a heavy toll on the purse strings.
There is no way to sugar-coat or underestimate the immense responsibility that will fall upon the shoulders of the next Prime Minister, who will take office in a week’s time, to take action.
The scale of the challenge at hand has been illustrated by last week’s announcement by Ofgem that the energy price cap will be hiked to an eyewatering £3,549 a year from October.
Scottish Chambers of Commerce has consistently heard from members of sleepless nights and fears they will not survive this winter due to looming increases in their uncapped energy bills.
Energy bills have already and will continue to fast outstrip the income of businesses and households, putting them into severe hardship and endangering our future prosperity.
Over the past 18 months, since the end of the Covid-19 pandemic, the threat down the tracks has continued to pick up pace.
Government inaction to deal with the threats of rising energy prices for businesses has contributed to a perfect storm of pressures for firms, squeezing profits and placing economic recovery into question, forcing firms to cut or hold back on investment, put projects on hold, and delay hiring if they can even find the right people.
We, along with the chamber of commerce network from across the UK, demand action now. Businesses are facing breaking point, putting jobs and livelihoods under great threat.
That is why we have published a series of action plans for both the Scottish and UK Government to implement immediate emergency support for businesses and consumers.
The next Prime Minister must set out an urgent emergency budget that provides grant funding akin to that delivered during the Covid-19 pandemic as well as an SME energy price cap to protect firms from the worst effects of sudden rises in energy costs. This should include a reduction in VAT on energy bills, applied to both businesses and consumers.
As businesses are also experiencing acute talent shortages, reform of the Shortage Occupation List is urgent to cover the labour shortfalls being felt across several key Scottish sectors such as agriculture, aviation, hospitality and logistics.
The Scottish Government must also take action to alleviate the cost burden on businesses and households, including pausing burdensome regulations and providing direct financial support. This should include a business relief package with emergency grants of its own, a system of funding like that delivered during the Covid-19 pandemic.
Scottish ministers should also seriously consider pausing planned changes to the non-domestic rates appeals system which make it simply inaccessible for businesses to file appeals. The buffers must also be put on the possibility of new taxes coming into play such as the workplace parking levy and tourism tax.
Businesses have long seen this crisis coming and we have been consistently telling governments that companies are facing unsustainable rises in costs. These concerns cannot be left unattended any longer.
The core SME business community that provides the spark for Scotland’s world-renowned entrepreneurial spirit and future prosperity is in danger of collapse and the time for talking is over.
Scottish businesses need support to be able to see out the current and imminent economic and financial hardships, which are set to derail economic recovery and will have long-term negative consequences for growth and jobs.
Government knows what the problems are, and the business community is offering solutions. It is time for them to do their duty and do all they can to protect businesses, livelihoods and jobs.
Liz Cameron is chief executive of Scottish Chambers of Commerce
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