UK SMEs Reach ‘Energy Tipping Point’

Sense of betrayal among businesses over energy price rises is set to put pressure on suppliers.

New research launched today by business community Ingenious Britain, in conjunction with business money-saving experts MakeItCheaper.com, finds UK SMEs at an 'energy tipping point', angry and frustrated with their suppliers. Business owners, managers and key decision-makers across the UK have overwhelmingly stated that they have lost trust in their energy providers and are fed-up with continually rising prices which they believe to be unfair.

Just 36% of the 500 UK SME decision-makers responding* said they trusted their energy provider - less than any other provider of business services including: banks (50%), insurance providers (51%), solicitors (69%) and accountants (77%). This lack of trust and negative perception is driven by recent accusations of price fixing (58%) and the continued announcement of record profits amongst energy companies (57%). The research shows that, should allegations regarding price-fixing be proven, SME business owners and managers would overwhelmingly seek compensation - 84% said compensation should be provided and 77% said they would seek a claim.

Other key findings emerging include:

  • Relentless price rises:Eight out of 10 (79%) SME decision-makers have seen a hike in their energy bill over the past year and a similar proportion (80%) believes this rise will continue over the next 12 months.
  • Bills are unfair:Three quarters (75%) claim that their energy prices are unfair and disproportionate, with 36% believing that they could be getting a better deal from their existing supplier.
  • Barriers to switching:Just over half (51%) are planning on switching in the next 12 months, with just under half (44%) believing that switching supplier is a difficult and complicated process.
  • Government could do better:71% of SME decision makers believe the government is not doing enough to help SMEs get a better deal from energy providers. Only 25% of those searching for help used government resources, with the majority looking to the private sector for help, either via price comparison sites (49%) or third party business advice sites (23%).

Mark Moore, founder of Ingenious Britain, said:

Energy providers are losing the trust of their business customers, particularly SMEs. This research shows widespread malaise and discontent amongst business owners and managers across the UK. 2012 was a bad year in terms of reputation for energy companies, with Libor-style pricing allegations in the news and the announcement of record-high profits, so it's no wonder the business community is frustrated.

Jonathan Elliott, managing director of MakeItCheaper.com, added:

Whilst I don't think we're about so see a Class Action launched, we do expect to see more businesses voting with their feet. The 51 per cent of businesses looking to switch in 2013 is higher than the 46 per cent that the regulator, Ofgem, has reported to have ever switched** and so it looks like this will be the year that hard-pressed SMEs finally get even with their suppliers.

- ENDS -

* The research was conducted in December 2012 by independent research company: Vision Critical.

** Research conducted by Accent on behalf of Ofgem, published in November 2012 as part of the 'Retail Market Review'. Download PDF

About Ingenious Britain

Ingenious Britain is leading business advice and community website. It is designed around, focused on, and created for UK small businesses and their needs.

About Make It Cheaper

Established in 2007 and based in Central London with 126 staff, Make It Cheaper is the number one destination for businesses to get a better deal on their utilities and other services. Acting on behalf of customers with total impartiality and free-of-charge, Make It Cheaper offers year-on-year savings across a range of products including: business energy, telecoms, insurance and merchant services (chip & PIN). By switching suppliers or helping to renegotiate deals with existing ones, it will typically save over 30% of costs - as well as a considerable amount of time that its customers can then spend on running their businesses. Make It Cheaper has been in the Sunday Times Fast Track 100 for the past two years and its 2012 Net Promoter Score was 74%.

Further information: Nick Heath 020 7654 0730 / 07720 297972 / nick.heath@makeitcheaper.com

Sample data

Q. Look at the following organisations and consider your business relationship with each of them. To what extent do you trust them?

  TotalRegionGenderAge
London Rest of South Midlands / Wales North Scotland Northern Ireland Male Female 18-34 35-45 46-55 56+
BASE: All Respondents 501 71 123 128 132 40 7 318 183 141 115 116 129
Bank 251 36 77 63 58 13 4 155 96 87 54 55 55
50% 51% 63% 49% 44% 33% 57% 49% 52% 62% 47% 47% 43%
Insurance provider 256 38 71 64 62 17 4 156 100 72 50 66 68
51% 54% 58% 50% 47% 43% 57% 49% 55% 51% 43% 57% 53%
Energy provider 182 26 53 41 49 11 2 116 66 70 39 36 37
36% 37% 43% 32% 37% 28% 29% 36% 36% 50% 34% 31% 29%
Solicitor 346 50 95 84 90 22 5 220 126 101 72 82 91
69% 70% 77% 66% 68% 55% 71% 69% 69% 72% 63% 71% 71%
Accountant 388 49 105 99 99 29 7 253 135 96 86 98 108
77% 69% 85% 77% 75% 73% 100% 80% 74% 68% 75% 84% 84%
Facilities management 300 42 79 78 75 22 4 204 96 98 72 65 65
60% 59% 64% 61% 57% 55% 57% 64% 52% 70% 63% 56% 50%
Fixed line/broadband provider 309 41 84 70 87 23 4 206 103 88 67 71 83
62% 58% 68% 55% 66% 58% 57% 65% 56% 62% 58% 61% 64%
Mobile contract provider 290 36 77 69 82 22 4 197 93 89 66 62 73
58% 51% 63% 54% 62% 55% 57% 62% 51% 63% 57% 53% 57%
Landlord (if you rent rather than own your business premises) 244 29 69 55 71 16 4 168 76 80 61 49 54
49% 41% 56% 43% 54% 40% 57% 53% 42% 57% 53% 42% 42%
Pension provider 256 33 72 65 63 20 3 176 80 84 55 52 65
51% 46% 59% 51% 48% 50% 43% 55% 44% 60% 48% 45% 50%
Recruitment consultancy/agency 213 36 50 52 55 17 3 145 68 82 53 38 40
43% 51% 41% 41% 42% 43% 43% 46% 37% 58% 46% 33% 31%
Merchant services (e.g. Chip and PIN provider) 285 42 68 71 75 24 5 197 88 89 66 63 67
57% 59% 55% 55% 57% 60% 71% 62% 48% 63% 57% 54% 52%

Q. Which, if any, of the following have negatively altered your opinion of energy companies?

  TotalRegionGenderAge
London Rest of South Midlands / Wales North Scotland Northern Ireland Male Female 18-34 35-45 46-55 56+
BASE: All Respondents 501 71 123 128 132 40 7 318 183 141 115 116 129
Recent accusations of pricing fixing 290 37 71 72 79 26 5 188 102 61 65 68 96
58% 52% 58% 56% 60% 65% 71% 59% 56% 43% 57% 59% 74%
Announcement of record profits 285 34 75 73 79 18 6 178 107 51 69 76 89
57% 48% 61% 57% 60% 45% 86% 56% 58% 36% 60% 66% 69%
Environmental concerns 92 14 21 28 21 7 1 61 31 34 23 17 18
18% 20% 17% 22% 16% 18% 14% 19% 17% 24% 20% 15% 14%
Increasing Direct Debit payments without authorisation 154 20 36 46 37 12 3 91 63 45 28 41 40
31% 28% 29% 36% 28% 30% 43% 29% 34% 32% 24% 35% 31%
Preventing you from switching 66 11 14 20 17 4 - 37 29 27 13 13 13
13% 15% 11% 16% 13% 10% - 12% 16% 19% 11% 11% 10%
Other (Please specify) 17 2 4 7 3 1 - 8 9 2 5 2 8
3% 3% 3% 5% 2% 3% - 3% 5% 1% 4% 2% 6%
None of the above 57 8 18 12 13 6 - 33 24 13 15 15 14
11% 11% 15% 9% 10% 15% - 10% 13% 9% 13% 13% 11%

Q. If energy price fixing was proven - do you think businesses should be compensated?

  TotalRegionGenderAge
London Rest of South Midlands / Wales North Scotland Northern Ireland Male Female 18-34 35-45 46-55 56+
BASE: All Respondents 501 71 123 128 132 40 7 318 183 141 115 116 129
Yes 420 60 103 104 113 33 7 276 144 106 97 96 121
84% 85% 84% 81% 86% 83% 100% 87% 79% 75% 84% 83% 94%
No 43 7 9 15 9 3 - 27 16 27 7 7 2
9% 10% 7% 12% 7% 8% - 8% 9% 19% 6% 6% 2%
Don't know 38 4 11 9 10 4 - 15 23 8 11 13 6
8% 6% 9% 7% 8% 10% - 5% 13% 6% 10% 11% 5%

Q. If energy price fixing was proven and compensation was available - would you pursue a claim?

  TotalRegionGenderAge
London Rest of South Midlands / Wales North Scotland Northern Ireland Male Female 18-34 35-45 46-55 56+
BASE: All Respondents 501 71 123 128 132 40 7 318 183 141 115 116 129
Yes 386 58 95 93 98 35 7 259 127 97 96 83 110
77% 82% 77% 73% 74% 88% 100% 81% 69% 69% 83% 72% 85%
No 42 4 9 14 13 2 - 27 15 25 5 10 2
8% 6% 7% 11% 10% 5% - 8% 8% 18% 4% 9% 2%
Don't know 73 9 19 21 21 3 - 32 41 19 14 23 17
15% 13% 15% 16% 16% 8% - 10% 22% 13% 12% 20% 13%

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