Small Talk: Slow progress on curbing the power of energy giants – but small businesses can do more to help themselves

 

Another week, another inch forward in the grindingly slow battle against vested interests and uncompetitive markets that do so much damage to consumers and small businesses alike. Six days after announcing the referral of the banking sector for a full-scale competition inquiry, the Competition and Markets Authority (CMA) announced the next step in its investigation into the energy market, which has already been referred for the same process.

The CMA’s “issues statement” is progress of a sort, in that it lays out further detail of what exactly it thinks the problems are in the energy market. But we’re a long way short of final conclusions or recommendations. Small businesses hoping for action to protect them from uncompetitive energy providers will have to wait until Christmas to see what goodies fall their way – Christmas next year, that is, since the CMA’s final report is not due until 25 December 2015. Goodness knows how long it will take after that to implement any regulatory reforms that are recommended.

As with the banking inquiry, most of the discussion about the energy market is focusing on the CMA’s investigations into consumer concerns. Consumers have actually become pretty adept at switching gas and electricity provider – not that it always does them much good – but unfair contracts, long-term lock-ins and penalty clauses have long prevented many smaller companies exercising the same rights.

While larger companies are able to negotiate their own terms with energy providers, smaller businesses do not have the purchasing power to do the same.

The energy industry will point to the promises it has made around rollover contracts, where small businesses have been automatically moved into new long-term arrangements, often at uncompetitive prices, unless they objected to this during a narrow and poorly advertised window of opportunity. However, substantial numbers of small businesses are still stuck with these terms. And this is far from being the only way in which smaller companies are abused by the energy industry.

The Federation of Small Businesses wants to see energy companies forced to publish easily comparable fixed prices so that small businesses can work out exactly what they might save by changing supplier. Clearer terms and conditions are also a priority for the group, which says many of its members have little understanding of the intricacies of their energy supply contracts.

One of the reasons that switching rates are low is that too many firms haven’t taken the time to investigate their options, despite the focus in recent times at many small businesses on cost reduction and operational efficiency. It may be more difficult for a small firm to change provider than a consumer, but it’s not impossible, particularly with the help of independent price comparison services such as Make it Cheaper.

Moulton fund buys office products firm

Jon Moulton’s Better Capital has had a busy week, closing the deal on the £80m acquisition of OfficeTeam, the office products and supplies company.

The Alternative Investment Market-listed closed-end fund, which offers exposure to private equity turnaround cases, has bought OfficeTeam from a consortium of lenders that took control of the business following a restructuring last year.

Better Capital made the acquisition via its BC12 fund, which trades a separate pool of assets to the other fund run out of the investment manager Better Capital 2009.

It takes the number of holdings in the fund to four – but while the three existing holdings are thought to be performing well, the fund’s price has drifted back close to its IPO price of January 2012 and the shares trade at a discount to net asset value of 6 per cent.

Mick Gilligan, an investment companies analyst at Killik & Co, believes this could be a valuation opportunity. “This poor share price action looks unjustified, and we think it is due to a combination of investor disappointment that the managers have not deployed more capital and some negative sentiment surrounding Better Capital as a result of poor operating performances in the firm’s other listed fund,” he says.

BC12 is due to announce final results on Wednesday and Gilligan expects to see “some value uplift”.

Junior market continues to bounce back

The Alternative Investment Market’s end-of-term report for the first half of the year makes encouraging reading as London’s junior stock market continues to bounce back from the lean years that followed the financial crisis and the recession.

Analysis published by the Aim specialist Allenby Capital this week reveals that £654m was raised on Aim during June, a 191 per cent increase on the same month of last year. That took the total raised during the first half of 2014 to £3.73bn, 151 per cent up on the same period of last year – in fact, Aim stood just £250m short of the total raised during the whole of 2013 by the end of the first half.

Allenby Capital’s research also flags up another positive development for Aim, with trading volumes increasing and liquidity improving.

“We believe that monthly trading value as a percentage of market capitalisation helps give an indication as to the liquidity of an individual stock,” the broker says. “Aim stocks traded on average 3.56 per cent of their market capitalisation in June, an increase on the 2.94 per cent in the previous month.”

Small Business Person of the Week: Nicky Cooper, Founder of  Inner Me

“I founded my business, which sells health and beauty supplements, three years ago. I was a lawyer at a finance firm and was into health and fitness, but in 2009 I got a big shock. I had been doing a lot of exercise and thought pains in my spine were connected to that, but my doctors diagnosed multiple sclerosis. It was a wake-up call and I began taking a much more holistic approach to my health and lifestyle.

“That’s where the idea for Inner Me came from – I realised that no one was helping people with the vitamins and supplements they needed, so people like me they were having to work things out for themselves. And there are all sorts of complexities – the amount of active ingredient in what are supposed to be the same supplements can vary enormously, for example.

“My idea was pitched around the concept of “we’ve done the research so you don’t have to”. I started talking to suppliers and thinking about the products I could sell.

“It has been hard work and I have to be careful because stress can trigger relapses of my MS. But the business is taking off and I’m able to pay myself a small salary. We’re stocked in Holland & Barrett, Selfridges, Boots and Whole Foods. What started as a lifestyle business for me has grown very quickly – we’ve now raised funding and I’m looking at taking on employees.”

Start your day with The Independent, sign up for daily news emails
Sport
sportSo, how closely were you paying attention during 2014?
Arts and Entertainment
Dennis speaks to his French teacher
tvThe Boy in the Dress, TV review
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
i100
Arts and Entertainment
The Plaza Theatre in Atlanta, Georgia was one of the 300 US cinemas screening
filmTim Walker settles down to watch the controversial gross-out satire
Arts and Entertainment
Amy Adams and Christoph Waltz in Tim Burton's Big Eyes
film reviewThis is Tim Burton’s most intimate and subtle film for a decade
Life and Style
Mark's crab tarts are just the right size
food + drinkMark Hix cooks up some snacks that pack a punch
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
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

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

Day In a Page

Aren’t you glad you didn’t say that? The worst wince-and-look-away quotes of the year

Aren’t you glad you didn’t say that?

The worst wince-and-look-away quotes of the year
Hollande's vanity project is on a high-speed track to the middle of nowhere

Vanity project on a high-speed track to nowhere

France’s TGV network has become mired in controversy
Sports Quiz of the Year

Sports Quiz of the Year

So, how closely were you paying attention during 2014?
Alexander Armstrong on insulting Mary Berry, his love of 'Bargain Hunt', and life as a llama farmer

Alexander Armstrong on insulting Mary Berry and his love of 'Bargain Hunt'

From Armstrong and Miller to Pointless
Sanchez helps Gunners hold on after Giroud's moment of madness

Sanchez helps Gunners hold on

Olivier Giroud's moment of madness nearly costs them
A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect