Local government launches new scheme to help SMEs tackle energy costs

Small to medium sized enterprises (SMEs) will be given help to drive down energy prices with the launch of a new energy switching scheme, unveiled at the Local Government Association annual conference today.

Targeting an initial 60,000 enterprises across seven local authority areas, the Ready to Switch for Businesses scheme will help give SMEs access to cheaper gas and electricity prices, and free advice on how to avoid energy contract pitfalls, such as expensive rollover contracts.

Peterborough City Council will lead the initiative alongside Blackpool, Luton Borough, South Holland, Hull City, Wiltshire and Northumberland.
The scheme is also open to other councils to become members and to help their local SMEs drive down costs.

The combined effort across several councils will help to increase the number of businesses signing up and will allow the scheme to negotiate better, and at times exclusive, rates to help SMEs save more.

According to Peterborough City Council, around four out of five businesses are not doing anything about their energy bills and are paying up to 35% more than they need to for their energy.

It says that this is mainly because owners of SMEs either do not have the time or do not know where to start looking for a new energy supplier as tariffs are not as readily available as domestic ones.

Secretary of State for Energy and Climate Change, Edward Davey, said: “Small and medium-sized businesses are crucial to the nation’s economic recovery, so we must do all we can to help them thrive and grow.

“We know that many SMEs struggle to find the best deal for their gas and electricity. That’s why I welcome this initiative by Peterborough and its partner Local Authorities, and their ambition to help 60,000 SMEs.

“I encourage councils across the country to follow their lead to help small firms to find ways to cut their energy costs,” he added.

Leader of Peterborough City Council, councillor Marco Cereste, said: “We’ve been working hard to bring about a scheme for businesses after helping to save money for hundreds of domestic customers.

“I understand how hard our business leaders work in the city and realise they never have enough time to do everything – this scheme is easy and straight forward and could save SMEs money that they don’t need to spend.

“This will benefit the local economy of all the authorities we’re linking up with during hard economic times. We also want to hear from other councils who want to join up and help their local SMEs drive down their bottom line.”

Chair of the LGA Improvement Board, councillor Peter Fleming said: “Council-run switching schemes have already helped well over 100,000 households save a whopping £10 million on their gas and electricity bills in the last year and hopefully this scheme will start to see local businesses accessing the same sorts of savings in order to help them grow and boost the local economy.

“Peterborough City Council has been a real pioneer in this area and their efforts go to show, that despite having our government grant cut by a third over the last three years, innovation in local government is continuing to help support cash strapped residents and businesses cope in these austere times.”

However, the scheme has not be viewed as a possible driver of resource efficiency in the private sector, as it focuses on reducing costs not consumption.  

Sources have stressed that the scheme is not in line with the European Commissions efforts to reduce the environmental impact of SMEs.

Last month, the European Commissioner for Environment, Janez Potocnik, said SMEs will be one of the European Commission’s top priorities in its effort to reduce resource consumption and the EU’s environmental impact.

Talking to edie, Potocnik said that it was essential to focus much of the European Commission’s attention on SMEs because “they are the drivers of our development”.

Leigh Stringer

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