Last year’s Autumn Budget brought an unwelcome increase in National Insurance (NI) contributions, putting additional pressure on already tight operating margins, but one area which could help to offset increasing overheads is a focus on energy efficiency.
While the connection between NI contributions and energy use might not seem obvious, inefficient use of energy is directly linked to increased operational costs for your business. As such, by minimising consumption through increased efficiency, businesses can counteract the rise in employment costs, maintaining profitability without raising prices or cutting staff.
At Boxfish, we see energy efficiency not just as a climate solution, but as a practical financial strategy.
Energy Efficiency as a Strategic Lever
Energy efficiency is often discussed through the lens of sustainability but the financial case for acting has never been stronger. Whether it’s simple initiatives such as upgrading to LEDs, optimising heating, and investing in insulation, or more bespoke capital projects, these improvements can translate to real savings, month after month.
For example, a typical SME spending around £50,000 a year on energy should easily be able to shave between 8 and 12% through targeted, low/no cost efficiency measures – switching off equipment overnight, setting timers and thermostats and engaging staff all deliver immediate improvements to the bottom line. That saving can easily cover the increased NI cost for one or more employees.
Building Long-Term Resilience as an Additional Factor
In an uncertain economic climate, resilience is everything. Energy efficiency not only saves money but also reduces exposure to energy price volatility. By reducing consumption, organisations are less vulnerable to price spikes and more in control of their budgets, longer term. This predictability is invaluable when planning workforce costs and navigating financial pressures such as increased NI contributions.
Making the Business Case
Despite the clear benefits, energy efficiency is often overlooked because the savings aren’t always immediate or visible. That’s why it’s crucial to approach energy efficiency as a strategic investment.
Government schemes and tax incentives, such as the Enhanced Capital Allowance (ECA) for energy-saving equipment, can support the business case. Pairing this with robust monitoring and evaluation of savings ensures that decision-makers can see the financial return alongside the environmental one.
Moreover, becoming more energy efficient strengthens a company’s sustainability credentials, which can be an asset in winning tenders, attracting investment, or recruiting staff who value responsible business practices.
Conclusion
The increase in employer NI contributions is another hit at an already challenging time but it also presents an opportunity to look inward and reassess operational costs from a fresh perspective. By investing in energy efficiency, businesses can not only offset the impact of higher NI costs but also future – proof themselves against further volatility.
In the long run, a more energy-efficient business is a more competitive one – and in today’s climate, that could make all the difference.
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