Small talk: Powers that be must help small firms fight energy bills rip-off

Cash-strapped households aren't alone in facing excessive energy bills – but while regulators such as Ofgem are now taking action on behalf of consumers paying too much for gas and electricity, small businesses have had much more limited support.

Rising energy bills have been an ever-more painful headache for businesses of all sizes over the past few years. Tata Steel warned last week that the cost of its energy in the UK is now so high it is struggling to compete with rivals in continental Europe, where it claims bills are 50 per cent lower.

However, for small businesses, the issue is especially acute, as energy bills often account for a disproportionate part of their costs. The average SME pays an annual energy bill of £8,000, around 9 per cent of their cost base. One of the problems, says Saurav Chopra, the chief executive of Huddlebuy, a deals site targeted at businesses, is sharp practice that energy companies wouldn't get away with in the consumer sector. Energy providers routinely offer discounted deals to attract new customers, subsequently rolling them over into uncompetitive contracts with only very short windows of opportunity to opt out.

"There's no nice way of saying this but energy companies are taking advantage of small businesses by making billing opaque and switching complex," says Doug Richard, the SME owner and former Dragons' Den judge.

Mr Richard is supporting an initiative launched today by Huddlebuy and Make it Cheaper, the price comparison site for businesses. Its Great Business Power Cut campaign is an attempt to get small businesses to team up in order to secure better deals from the power giants. "Small businesses are paying through the nose when it comes to their energy bills," Mr Chopra says. "They are getting ripped off."

Clearly, Huddlebuy and Make it Cheaper have a vested interest. But regulators have been less focused on soaring energy bills in the SME sector at a time when the authorities from the Energy Minister down have been increasingly vocal about consumer detriment. Even the Energy Ombudsman will only accept complaints from the very smallest businesses.

Meanwhile, energy-industry specialists say that the efficiencies available to SMEs that do their homework are really worthwhile. "The savings possible are huge," says Martin Lewis of the Money Saving Expert personal finance website. "For a sample postcode we tried in the North-west of England on an annual electricity bill of £3,500 using the regional electricity company, it was possible to cut the bill to £2,300, a saving of £1,200."

Mr Lewis recommends small business-focused comparison services such as UK Power, the Business Advisory Service and Make it Cheaper as a good place to start for SMEs looking to cut their energy bills.

Still, business contracts tend to be more opaque than in the consumer sector and often lock customers in. To really tackle that, tougher regulatory action may be needed. Ofgem said in November it was considering enforcement action against suppliers preventing business customers from switching through unfair contract terms. We're still waiting.

Bluehone loan arranger

One man's problem is another's opportunity. Enter Bluehone Secured Assets, which thinks there's money to be made from the shortage of funding for Britain's smaller companies, and today unveils details of a new issue in which it will look for up to £40m from retail and institutional clients.

The money will be used to make secured loans to SMEs assessed as good risks. It will make five-year loans of between £1m and £3m, charging a rate of Libor plus 4 per cent. If all goes to plan, Bluehone's investors get a decent yield plus the prospect of capital growth. The latter comes from the warrants Bluehone will insist its borrowers issue to the company.

The clincher will be the quality of the firms it lends to. To make that yield target, it needs to avoid defaults, and its borrowers' businesses must grow if the warrants are to have any value.

Incentive for Intercede boss under attack

Another day, another corporate governance row on the Alternative Investment Market.

The latest company in the firing line is Intercede – one of Britain's more successful technology start-ups – which has run into trouble with one of its shareholders.

Roger Lawson, an investor in the company – and also chairman of ShareSoc, a pressure group representing private investors – claims its long-term incentive plan "demonstrates many of the aspects that are abhorrent in the current system of remuneration in public companies".

What's got Mr Lawson's goat is a plan that pays out several hundred thousand pounds' worth of share options – each one priced at a nominal value of 1p – to Intercede founder and executive chairman Richard Parris in three years' time, assuming the business's earnings per share growth outstrips inflation by 5 per cent over that term.

Mr Lawson calls the award a "disguised pay increase" and says the company ignored shareholders' concerns about it.

Intercede is having none of that. "The package was properly approved by the Remuneration Committee, who did engage with key shareholders," a spokesman says.

"Intercede's management has done an outstanding job in growing the company."

That's true enough – the company is a genuine British success story. Still, Intercede has breached corporate governance guidelines, like too many of itsAIM contemporaries.

Small businessman of the week: Broadband needs tackled at high speed

Boris Ivanovic, founder and chairman of broadband provider Hyperoptic

Our model is to respond to customers' needs in a way that incumbent providers don't and can't – they are generally very slow to offer new services for which there is customer demand because they're worried about cannibalising their existing customer base.

People want a high-speed service, not to be lagging behind the rest of the world, but Britain currently ranks 25th on speed of broadband and is slipping down the rankings all the time.

The technology exists to provide broadband access that's 150 times' faster than currently available and there's no reason not to do it in the UK. Each time we've done that, people have asked me whether there really is a need for such speed, but partly it's chicken and egg – if you provide the speed, there will be applications developed to exploit it. Interestingly, the demand is more from consumers than business, because the applications individuals use tend to require more bandwidth."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Voices
Lucerne’s Hotel Château Gütsch, one of the lots in our Homeless Veterans appeal charity auction
charity appeal
Sport
Brendan Rodgers is confident that Sterling will put pen to paper on a new deal at Anfield
footballLIVE: Follow all the latest from tonight's Capital One quarter-finals
Life and Style
A woman walks by a pandal art installation entitled 'Mars Mission' with the figure of an astronaut during the Durga Puja festival in Calcutta, India
techHow we’ll investigate the existence of, and maybe move in with, our alien neighbours
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
PROMOTED VIDEO
News
people

Jo from Northern Ireland was less than impressed by Russell Brand's attempt to stage a publicity stunt

Voices
Jimmy Mubenga died after being restrained on an aircraft by G4S escorts
voicesJonathan Cox: Tragedy of Jimmy Mubenga highlights lack of dignity shown to migrants
News
i100
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Life and Style
tech
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Ashdown Group: Java Developer - North West London - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Selby Jennings: Corporate Communications & Marketing Specialist – Geneva

120,000 - 150,000 chf + bonus: Selby Jennings: A leading Swiss Private Banking...

Day In a Page

Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum
France's Front National and the fear of a ‘gay lobby’ around Marine Le Pen

Front National fear of ‘gay lobby’

Marine Le Pen appoints Sébastien Chenu as cultural adviser
'Enhanced interrogation techniques?' When language is distorted to hide state crimes

Robert Fisk on the CIA 'torture report'

Once again language is distorted in order to hide US state wrongdoing
Radio 1’s new chart host must placate the Swifties and Azaleans

Radio 1 to mediate between the Swifties and Azaleans

New chart host Clara Amfo must placate pop's fan armies
Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

Homeless Veterans appeal: 'It's life, and not the Forces, that gets you'

The head of Veterans Aid on how his charity is changing perceptions of ex-servicemen and women in need
Torture: It didn't work then, it doesn't work now

Torture: It didn't work then, it doesn't work now

Its use is always wrong and, despite CIA justifications post 9/11, the information obtained from it is invariably tainted, argues Patrick Cockburn
Rebranding Christmas: More public bodies are refusing to give the festival its name for fear of causing offence

Rebranding Christmas

More public bodies are refusing to give the festival its name for fear of causing offence. They are missing the point, and we all need to grow up
A Greek island - yours for the price of a London flat

A sun-kissed island - yours for the price of a London flat

Cash-strapped Greeks are selling off their slices of paradise
Pogues could enjoy fairytale Christmas No 1 thanks to digital streaming

Pogues could enjoy fairytale Christmas No 1 thanks to digital streaming

New system means that evergreen songs could top the festive charts
Prince of Wales: Gruff Rhys on his rock odyssey, and the trouble with independence

Prince of Wales: Gruff Rhys

He is a musician of wondrous oddity. He is on a perpetual quest to seek the lost tribes of the Welsh diaspora. Just don't ask Gruff Rhys if he's a national treasure...