British small businesses are paying 15 % more for energy than their European competitors, even after the Energy Price Guarantee ended. The average SME now spends £18,000 a year on gas and electricity – money that could hire an extra apprentice, replace a van, or survive a quiet quarter. Ofgem’s latest figures show non-domestic energy prices remain 40 % above pre-crisis levels, while France, Spain, and Germany have extended subsidies and kept industrial tariffs under control.
The Energy Bills Discount Scheme that replaced the EBRS in 2023 was so restrictive that only 11 % of eligible SMEs actually received support. A café in York with a £2,400 monthly bill was told it 
didn’t qualify because it wasn’t “energy-intensive” enough. Meanwhile, domestic customers still enjoy a price cap; businesses get nothing.
We need two immediate fixes.
First, extend a version of the domestic price cap to all businesses with fewer than 50 employees and annual consumption under 100,000 kWh. This would cost the Treasury £1.2 billion a year – less than the £1.5 billion already spent on public-sector energy support in 2025 – and would bring certainty until wholesale prices stabilise in 2027.
Second, slash business energy VAT from 20 % to 5 % permanently. That single change would save the average SME £2,500 a year with zero bureaucracy. Domestic bills have been at 5 % since the crisis began; there is no logical reason commercial users should pay four times the rate on the very same electrons.
These are not radical ideas. Germany caps industrial electricity at €0.06 per kWh until 2030. France has frozen tariffs for small firms. Britain is the only major economy that has left its small businesses completely exposed to global gas markets.
Energy is not a luxury; it is the oxygen every business needs. When the bill arrives, owners face a brutal choice: absorb the cost and cut wages, or pass it on and lose customers. Neither is sustainable.
Extend the price cap to SMEs and cut VAT to 5 %. Give Britain’s small businesses the same breathing space every household already enjoys.
The 1832 Club is fighting for these changes. The more members we have, the louder our voice in Westminster.
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