The BBPA and UKHospitality has called on the Government to insist energy suppliers offer a window for renegotiation for the sector.
The BBPA said that, on 1 April, the average energy bill for a pub will rise by £18,400 a year, after the Government’s energy relief for businesses ends, adding ”further pressure to a sector that is struggling to retain profit margins, with over 560 pubs closing their doors throughout 2022, more than during each year of the pandemic”.
Emma McClarkin, Chief Executive of the British Beer and Pub Association said, “This has been a critical issue for our sector for far too long and as the 1st April draws closer we have reached a point where businesses have nowhere left to go, as costs increase, and their profit margins are completely erased.
“Last week the Government extended energy support for consumers but left businesses out in the cold, in doing so the Chancellor recognised the UK’s energy market is broken but to date has done little to fix it. As a result, pubs and breweries are now doing all they can to prepare for an extreme hike in costs come 1st April, with some expected to pay almost £20k more for their bills than the day before.
“If these costs were passed on at the bar it would push prices for customers through the roof. Our pubs and brewers are doing everything they can to limit the impact of these baked-in higher costs on consumers but it’s becoming increasingly difficult to do so.
“With no action on energy for businesses, the simple fact is thousands of our pubs and brewers will be at risk of closure come 1st April and will be lost from communities across the country forever.
“We need the Government to step in give businesses in the “pain zone” of sky-high contract rates a window to renegotiate and bring those costs down. It’s clear a fair and sustainable energy market for businesses as well as consumers is needed before it’s too late.”
The Association’s urgent call follows a longer-term ask made at the end of January for a Government inquiry to investigate poor practice by suppliers and called on the Business and Treasury Select Committees to act, following reports from publicans and brewers there were sharp increases in non-energy costs being layered onto bills, harsh new terms and conditions, requirements for enormous up-front security deposits and in some cases refusing to contract with hospitality businesses at all.
UKHospitality chief executive Kate Nicholls said, “The ONS stats released this morning ( 22 March) show a clear correlation between the unexpected rise in inflation and inflated prices in the hospitality sector, where food and drink costs for businesses have risen by 24%. This, along with soaring energy costs, has resulted in prices for customers rising more than 12% – the highest in 30 years.
“If the Government is serious about bringing inflation under control quickly then it therefore needs to address this cost of doing business in the sector, particularly as this is only set to get worse this April when support with soaring energy costs falls away. At this point, contracted prices are due to rise a further 82% on average, which will force operators to raise prices for consumers again, further driving inflation.
“The solution is clear: urgent action on the market failures identified by OFGEM last week to force suppliers to the table, to enforce the renegotiation of contracts signed between July and December 2022, penalty-free, and to enact full regulation of the non-domestic energy market, if suppliers are not willing to act.”