Stunted Growth: How soaring costs and chaotic billing are holding back British business
“Growth […] is about the pounds in people’s pockets; the vibrancy of our high streets, and the thriving businesses that create wealth, jobs and new opportunities for us, our children, and our grandchildren.”
This is just one of the rousing statements given by Chancellor Rachel Reeves as she set out the Government’s plans to boost growth. Small and micro businesses make up 98% of the business population.* Their success will be essential to ensuring that economic growth takes off across the country.
However, small businesses continue to face a muti-crisis landscape that threatens their survival — and flattens hopes for growth. Freezes to business rates are being rolled back, National Insurance Contribution increases are coming into effect, and operational costs continue to spiral.
Alongside these new, unwelcome pressures, energy prices remain punishingly high. Unlike domestic energy customers, small businesses do not benefit from a price cap. This means they have to absorb energy costs that continue to soar above pre-pandemic levels. These costs are having a devastating impact on businesses, with the hospitality industry alone reporting 4,078 closures in 2024.
Despite these challenges, there is a clear appetite for growth in the sector. One of the things business owners will need to support this growth is a functioning energy market, with regular, accurate bills to help them manage costs. However, new research from Citizens Advice and Yonder has uncovered a culture of poor practice when it comes to billing small business consumers.
Diving into the data
Last year, Citizens Advice and Yonder ran a survey on small business energy customers. It aimed to find out more about their experiences of the energy retail market.** We found a complex picture, defined by low customer expectations and pockets of deep dissatisfaction. Customer bills emerged as the area most fraught with difficulty.
75% of businesses surveyed had experienced a billing problem in the past 12 months.
Inaccurate bills, over-charging and smart meter failures were the main causes of disruption.
Of those who experienced a billing problem:
- 46% had received an estimated bill, despite having submitted a meter reading
- 45% had received an estimated bill which was different to their actual bill
- 39% were charged more than they should have been for their energy use
Further, smart meters are supposed to cut out the need for an estimated bill, as they send readings straight to suppliers. However, 76% of business customers with a smart meter reported receiving estimated bills at least some of the time. This plays havoc with their tightly-managed budgets at a time when businesses are already feeling the squeeze.
Businesses are struggling to survive, let alone grow
Billing failures are having a huge impact on businesses. Unexpected costs caused by bill adjustments or overcharging make it hard to budget. In addition, time spent resolving issues takes precious hours away from clients and customers. All of these difficulties erode consumer trust and confidence, making it less likely that a business reaches out to their supplier if they encounter another problem.
“Initially I was talking to them through an online chat and then that got escalated to email. This was in between also talking on the phone, getting cut off after 20 minutes and having to start all over again. You really feel as if you’re up against this huge machine and no one cares.”
A loss in consumer trust has big implications for the future. The transition to Net Zero will require significant action from homeowners and businesses alike. Consumers may need to upgrade their appliances or flex their energy use. Customers who don’t feel like they’re getting a good deal — or who don’t trust their energy supplier — are much less likely to pick up these practices now or in the future.
Short term action brings long term benefits
Urgent action is needed to bring energy consumers back on side. Lowering costs and improving customer experiences will be key in ensuring Net Zero support from businesses in the long run.
In response, the Government has pointed to their long-term energy generation strategy as a way of bringing prices down for good. There’s no question that a home-grown, green energy supply has the potential to bring down energy bills in the longer term. But in the shorter term, small businesses continue to face a multi-crisis landscape in which energy bills are playing a huge part. The government should work out if action is needed to make business energy more affordable. Meanwhile, the energy regulator Ofgem needs to ensure that suppliers’ poor practices are halted, and that businesses are being treated fairly.
In a functioning energy market, the majority of consumers receive an accurate bill that is reflective of the energy they have used. The widespread inaccuracies uncovered by this latest research show just how far we are from this basic goal. We are therefore asking Ofgem to investigate small business billing practices. It is vital that we uncover the systemic issues that are causing so many businesses harm.
Regulator action aside, energy suppliers don’t have to wait. Work should start now on improving billing for business customers. Small businesses can help supercharge Britain’s growth, and that of the future energy market. Let’s not let bad billing hold them back.
Citizens Advice is the Statutory Consumer Advocate for Small and Micro business customers. For specialist help and advice, check out our webpage or contact the consumer service on 0808 223 1133.
*In this blog, we’re using the term ‘small businesses’ to apply to both micro businesses (with 10 or fewer employees) and small businesses (with between 11 and 50 employees).
** Citizens Advice and Yonder, Consumer Experiences of the Non-domestic Energy Market, fieldwork Sept-Oct 2024, publication forthcoming.
