Hospitality bodies have warned that business failure is worse now than it was during the pandemic as the sector braces itself for the first month of trading following the end of the government’s energy bill relief scheme.
“We’re seeing an acceleration of business failure which is now worse than the pandemic,” Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA) told City A.M.
“Pub bills are going up by £20,000 to cover energy costs increases,” she said, warning that some businesses will see a tripling of their energy bills.
“[High energy costs] are the number one reason for pub closures right now.” McClarkin added, calling on the government to open up a “window of renegotiation” with energy suppliers.
She explained: “We know that the energy companies are seeing those prices come down and we need them to pass that on to our community businesses that are wanting to stay open and serve their communities.”
The plea comes as the government’s energy bill relief scheme, which provided £18bn to businesses to help with soaring cost, ended on 1 April.
This support package has now been replaced with the energy bills discount scheme which will see the amount reduced to £5.5bn.
Kate Nicholls, CEO of UKHospitality, said that the introduction of the tighter handout will “greatly reduce” the support available to the hospitality sector which is facing extra costs of £7.3bn.
“The energy crisis has suffocated businesses over the past year, causing thousands to fail and forcing many more to take drastic measures to afford extortionate energy bills,” Nicholls said.
It’s another blow for the sector which has been picking up the pieces from the Covid-19 pandemic and also navigating the ongoing cost of living crisis.
A recent Cornwall Insight’s Business Electricity Bill Forecast has also shown businesses that fixed their energy contracts at the peak of the energy market last year could be facing up to a 133 per cent rise in bills this April.
They said: “The new system will mean a difficult return to market prices for many. This is especially true of those businesses that fixed their bills at the height of the market who will have to contend with fixed contracts at levels the new support will barely touch.”
Wetherspoon founder and chairman Tim Martin, offered his “sympathies” with the beleaguered hospitality industry.
He said: “Our general view is that there should be tax equality with supermarkets (who pay zero VAT on food, whereas pubs pay 20 per cent) , rather than temporary and complex, short-term reliefs, which confuse and don’t add up to much in the long run.”
A government spokesperson said: “We have been helping businesses throughout the winter, enabling some to only pay around half of the predicted wholesale energy costs.
“Global energy prices have fallen significantly and are now at their lowest level since before Russia’s illegal invasion of Ukraine. The new level of government support reflects this welcome fall in prices, but we will continue to stand by businesses, as we have done over the winter.”