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Energy crisis placing “enormous” pressure on Scottish businesses

Andrew Mackay of the Pentland Hotel, Thurso. Picture: Sandy McCook

Scottish businesses are facing a huge burden of rising energy costs and must be protected by a price cap, a leading business organisation has said.

Ahead of the UK Government’s Autumn Budget on Wednesday, the Scottish Chambers of Commerce (SCC) has called for the introduction of a small and medium enterprise (SME) energy price cap to protect Scottish businesses from the increasing price of gas and electricity ahead of the cold, winter months.

Chancellor of the Exchequer Rishi Sunak delivering his Budget to the House of Commons in London. Picture: UK Parliament/Jessica Taylor

SCC have reported how one chamber member, the Caithness Collection hotel group, is expecting to be hit by an increase of more than £50,000 per year in electricity costs as they move to a new contract, the equivalent to a 70% spike on their current yearly bill.

Andrew Mackay, owner of the group which operates the Norseman Hotel in Wick, the Pentland Hotel in Thurso and Castletown Hotel (Castletown), said it is “vital” that hard-hit businesses are protected.

The energy cash crunch comes hot on the heels of  some of the worst trading conditions businesses have faced in living memory due to Covid as well as Brexit.

He said: “The hospitality sector was one of the hardest hit throughout the pandemic and recovery is already proving challenging, with difficulties finding and retaining staff, increased wage demands, other supply chain issues and tax increases.

“Rising energy costs are creating huge burdens and challenge for the business and it’s vital that Scotland’s businesses are afforded some buffer to guard against energy prices that are hitting them hard.”

Scottish Chambers of Commerce chief executive Liz Cameron. Photo by Abrightside Photography

Dr Liz Cameron, chief executive of SCC said it has taken only weeks for some business to reach crisis point over gas and electricity prices.

“Businesses are feeling the consequences,” she warned.

“Many businesses in Scotland are still operating in survival mode and continue to recover from the dual challenges of the UK’s departure from the UK and the impact of the global coronavirus pandemic.

“It’s impossible for firms to keep pace with these exorbitant rises in energy prices.

“The UK Government need to support business recovery over the winter months and SCC believe there is now a clear case to create an SME energy price cap.”

Caithness Chamber of Commerce chief executive Trudy Morris

Trudy Morris, chief executive of Caithness Chamber of Commerce backed the call.

She said: “The Scottish and UK economy remains in a fragile position and there are mounting challenges for businesses across sectors being created by inflationary pressures, labour market shortages and supply chains, an SME energy price cap would take away one of these pressures and place business recovery on a firmer footing.

“Hospitality and tourism are key sectors for areas like Caithness and it’s vital that government, at all levels, use all the economic levers at their disposal to ensure businesses are able to recover during the winter months and not have a return to growth derailed by rising energy prices.”