This letter was sent from Oxford City Council to the Government, asking for more support for Oxford residents and businesses with the Cost of Living Crisis. 

Dear Prime Minister,

Cost of living impact on businesses

Congratulations on your new appointment. I am contacting you on the urgent matter of businesses and their vulnerability during the cost-of-living crisis.

Quite rightly, much of the media focus has initially been on low-income households who are already being hit hard by inflationary pressures across costs of food, housing, clothing, energy and other basic and necessary goods and services and I very much hope that you will be making urgent and adequate provision to protect our most vulnerable households. I am extremely concerned about some of the agonising choices people are already having to make between food, clothing and energy costs, and these are only going to get worse without more help. However, there has been a failure to acknowledge the depth of challenge businesses face which could conclude in a winter where many thousands of people become unemployed as businesses downsize or permanently close, making the problem for individual households worse.

The increase in operating costs our businesses in Oxford are being presented with is simply not sustainable. Businesses have been exposed to energy prices for months without the protection of a price cap. These costs are entering a new phase where they are spiralling out of control. Parts of the hospitality sector for example are anticipating a 300% increase in the energy bills with reports that 70% of pubs may close.

A local business has advised us:

“The scale of the increase is frankly staggering. EDF this morning quoted for electricity for example 72p per KW of usage instead of 14.8p per Kw we paid previously for an average annual volume of 75000 KW. This is an increase of 486 % taking our electricity bill to nearly £60K a year. This was the cheapest deal available this morning.

“Gas companies are not even able to quote at this stage due to the volatility of the market and the insanely high wholesale prices.

“A small business like ours which used to pay £15K a year in energy could not withstand a 5 or 6 fold increase and would have to make very serious decisions very soon.

“We worked very hard to survive the pandemic and created more jobs and spent a lot of money on increasing wages and expanding the business and now have 13 FTE. Our wage bill has doubled due to that and the inflation caused by a steep shortage of staff. To add to that all products have increased by over 15% in the last 10 months and there is no sign of this abating.

“This energy crisis is the final straw.”

This crisis for our high streets and wider business community could not come at a worse time. Too many of our businesses are working hard to rebuild their balance sheets following the disruption of the pandemic. Omicron helped to derail this mission by decimating consumer confidence last Christmas, affecting many of our leisure and hospitality operators specifically. Our businesses are dealing with on-going labour shortages, salary inflation and supply chain problems. Overall, business resilience is incredibly weak. They are reliant on an immediate response from your new government.

This cannot come soon enough. The reality is, many business owners are doing their budgeting now, coming to the conclusion that they no longer have a viable business model and are downsizing or shutting up shop before they accumulate more debt. And it’s not just our consumer facing businesses like shops, restaurants, cafes, pubs, cinemas, theatres, nightclubs and gyms that are facing pressure. Any organisation or entity with property and production costs is in trouble. Nurseries, community centres, manufacturers, research institutions, pharmacies, public services, museums, charities and galleries. They all form an important part of an eco-system that makes up our local economy. They hold our community together.

The response from government must be comprehensive. We ask you to consider the full fallout of the cost-of-living crisis, not just the rise in energy costs. Businesses and employers now face multiple threats, all of which must be addressed urgently.

Oxford City Council, and local authorities in general, are far from immune to the impacts of this crisis. Local authorities are facing the same energy and inflationary impacts but don’t have the same flexibility to increase prices, or suspend many of our operations and services. While many businesses will unfortunately be impacted by falling demand, Councils can expect to see increased demand for our services from residents and government alike.

There is the uncertainty around energy supply during the winter which needs to be addressed and our level of exposure to energy rationing. We have to acknowledge that for many businesses, dealing with increasing operating costs is no longer enough as some sectors might see a collapse in consumer spend, especially during the Christmas period.

We need solutions that resolve as many of these problems as possible. And if these challenges are, as some commentators suggest, going to last years, then we equally need the reform and investment that is far-sighted so we do not need to rely on a hand-to-mouth existence.

Our business community is facing significant pressures that require immediate redress. We urge you to make this a top priority for your new government, alongside the need to protect the poorest in our society from the ruinous impact of spiralling energy and food costs.

Yours sincerely,

Cllr Susan Brown

Leader of Oxford City Council