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FSB calls for an end to energy contract rollovers to support SMEs

POSTED: 29th January 2013
IN: Business news
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The Federation of Small Businesses (FSB) has backed a call for the government to put an end to the practice of rolling over energy contracts for small firms.

According to a statement from the organisation, small businesses with less than ten employees can be subject to contract rollovers that often leave them on more expensive terms for a full 12-month period.

It is paramount small and medium-sized enterprises get a grip on all their costs in the current economic headwinds, and with gas and electricity prices continuing to rise, this is one area in which they might curb their spending.

Caroline Lucas, MP for Brighton Pavilion, tabled the Micro Business and Energy Contract Rollover Bill that would limit the length of time energy companies can lock a business into a new agreement to 30 days.

"It's deeply unfair that, while micro businesses often consume products and services in a similar way to domestic consumers, they do not enjoy the same level of regulatory protection," Ms Lucas said.

"This leaves them vulnerable to being 'rolled over' from their current energy contract into a new one without their knowledge - making it impossible for them to negotiate a better deal for another 12 months."

Research from the FSB has suggested one in four small companies have been rolled over without their knowledge, with 82 per cent of sampled businesses supporting the abolition of this practice.

National chairman of the FSB John Walker said: "It is something which government and Ofgem must tackle to give small firms a better deal at the hands of the big six energy companies."

No doubt a number of small firms will have increased their energy use last week as the winter weather conditions kicked in and much of the country suffered snow, ice and freezing temperatures.

According to estimates from Green Flag Breakdown, this may also have proved costly for British businesses as 51.4 million working hours were lost to the bad weather - costing employers around £318 million. 

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