The UK hospitality sector is grappling with skyrocketing energy costs, with an analysis from UKHospitality revealing that energy expenses for the industry are set to be £12 billion higher than before the energy crisis. The situation is expected to worsen as of tomorrow (April 1), when the Energy Bill Discount Scheme comes into effect, reducing support for businesses and leading to £7.3 billion in increased energy bills for the hospitality sector.
Despite the crippling costs, energy prices show no sign of abating. Energy costs now account for 11.4% of business turnover, a stark increase from the 3.4% before the crisis. A recent UKHospitality survey found that 41% of its members had been refused a quote from energy suppliers solely because they operate within the hospitality industry.
UKHospitality Chief Executive, Kate Nicholls, expressed concerns about the situation, saying, “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.” She added that “A £12 billion increase in energy costs in a year is almost incomprehensible and, frankly, unsustainable for much longer. The transition to a continued, but significantly reduced, energy support scheme does not provide much comfort for anyone, especially with the £7.3 billion price tag it comes with.”
Nicholls called for urgent action to curb profiteering energy suppliers, who she believes have exploited the crisis to boost their profits at the expense of hard-working hospitality venues. She urged Ofgem, the UK’s energy regulator, to act swiftly, stating that its current plans to consult on suggested actions in the summer are not adequate to address the pressing needs of the sector.
“It’s clear to everyone that a driver of these rocketing costs has been some suppliers that have seen this crisis as an opportunity to boost their bottom line, at the expense of hard-working hospitality venues.
“Ofgem itself has recognised this but has been unable to yet take decisive action. Its current plans to ‘consult on suggested actions’ in the summer is not at the speed the sector needs and it needs to move much, much quicker to rein in these suppliers.
“If Ofgem doesn’t feel it has the teeth to grip hold of this problem, the Government needs to step in immediately to sanction those energy suppliers or immediately give further powers to the regulator,” Nicholls concluded.
