The hospitality sector has urged that many businesses “wont stay afloat” if the government does not look to provide extra support with soaring energy bills in its upcoming spring budget.
“The steep increase in utility costs is having a significant impact on our business, it’s now one of the largest cost to manage,” Simon King who is founder of Igniting Hospitality and also runs The Victoria, a pub in Surrey, told City A.M.
King explained that his pub has been using wood and coal ping fires as a form of additional heat to cut back on costs but has found that the cost of these items have now also “dramatically gone up”.
Ahead of the budget on 15th March, he is now calling for greater support in these areas, either through subsidies or business rate relief.
King said: “In what is a hard industry with small margins and despite the adversity everyone in the industry giving their all to stay afloat and keep trading, unfortunately without some government intervention it is likely that many businesses small and large won’t survive.”
The plea comes as the government revealed it is set to reduce the amount of relief it provides businesses and public sector organisations in relation to energy bills in April.
The current Energy Bill Relief Scheme, which was announced in September, has provided £18bn to businesses to help with soaring costs.
However, this support package will now be replaced with the Energy Bills Discount Scheme which will see the amount reduced to £5.5bn.
The support will only apply to 70 per cent of energy used by businesses, while also raising the threshold in energy costs for when support kicks in.
Moreover, UKH Hospitality chief executive Kate Nicholls has been rallying for a temporary, reduced rate of VAT to mitigate against the extraordinarily high energy prices pubs are facing – which she believes would “stimulate growth and cut costs”.
Speaking previously she said: “A temporary reduced rate of VAT would reduce costs, which would help lower inflation, and drive demand and growth. We saw its success during the pandemic and that can be replicated now.”
Anthony Ainsworth, chief operating officer at npower Business Solutions, was concerned the scaled back package could leave businesses exposed.
To help ease bills, he called on the new department for energy security and net zero to “double down” on supporting businesses to reduce their overall energy consumption through greater energy efficiency.
However, Ainsworth also believed further financial support was an urgent issue for businesses.
He told City A.M.: “More support is needed now. We are working closely with our customers to help them implement the most effective energy strategy over the coming months, but we know that more incentives to help businesses reduce energy demand would be hugely welcome.
City A.M has approached the government for comment.