More than two in five small hospitality businesses have said they plan to close, downsize, or restructure if energy relief comes to an end in April, according to a survey by the Federation of Small Businesses (FSB).

The FSB has warned discontinuing government support will force thousands of closures, with the survey finding that 24% of smaller firms plan to close, downsize, or restructure without government support on energy bills. This figure rises to 42% of firms in the food and accommodation sector.

The news comes ahead of the expected announcement of the Energy Bill Relief Scheme review, which will determine whether small firms will continue to receive energy support after the current six-month period ending on 1 April 2023.

The FSB has proposed significant energy support for small businesses for at least the next six-month period, based on a fixed wholesale price. It has also recommended further controls on energy suppliers to protect small businesses.

The research further found that 30% of small firms expect to cancel or scale down planned investment, while 44% will consider raising prices to cope with soaring energy bills, if the government withdraws energy support.

FSB National Chair Martin McTague said: “After two long years of COVID, this Christmas was supposed to the one bringing back that small business spirit – but many small firms are now worried that they might have to shut their doors for good in a few months, if not weeks.

“More than 16 million jobs are in small firms. Our members are telling us their businesses as well as their staff are dependent on government support in this energy price crisis.

“We’d like to see the upcoming publication of the review taking business size into account, acknowledging the fact that small firms have typically lower margins and are least able to deal with skyrocketing energy costs – a purely sector-based decision will lead to deadweight and unfairness.

“At the same time, Government must intervene when energy suppliers find routes to inflate prices, raise standing charges, and ask for disproportionate upfront payments – these heavy-handed practices defeat the whole purpose of the multi-billion-pound relief scheme and will drive more small firms to go under.”