Soaring energy prices poses bigger threat than the pandemic
Bath Pub Company managing director Joe Cussens has seen exponential price increases across his four pubs, with one of the pubs electricity renewals recently being predicted to rise from £29,000 a year to £60,000.
Cussens said: “When [the pandemic] first reared its head, it was terrifying for everybody.
“But once we heard about the support that was in place, and the messages coming out of Government, which is they understood the threat and they were going to do whatever it took, [we] quickly felt reassured.
No help coming
“It's been a difficult 24 months, but I didn't really, apart from perhaps those first two or three weeks, ever feel the business was under threat, but having come out of that, this energy crisis has come along and is a different matter altogether, because there are some horrendous cost rises we're being hit with, and unlike the pandemic, there's no help coming, in fact, quite the opposite.”
This comes as the reduced rate of 12.5% VAT for pubs ended this month, rising to 20%, as well as national insurance and minimum wage contributions increasing and the cost-of-living crisis being at a 30 year high, posing the question of how much of these increases can be passed onto consumers before they stay out of pubs.
Cussens added: “On top of the tsunami of other price rises, all of our suppliers building up their prices, we've got this massive increase in costs, with no help or support at all, or even words of encouragement from the Treasury, and at the same time, you've got customers who are feeling squeezed because of their energy prices.”
According to Cussens, energy suppliers have deemed the sector “risky” and are not offering pubs, which are not protected by price caps, the best rates with the problem being they are policing themselves.
The cost of energy unquestionably poses a bigger threat to the sector than the pandemic did; for that crisis support was in place, for this one, nothing.
— Joe Cussens (@joecussens) April 7, 2022
There'll undoubtedly be plenty of otherwise viable businesses failing due to it
He said: “At the same time as you've got small businesses worrying themselves sick about how they're going to survive, you've got energy companies boasting about making record profits.
“It just seems insane the Treasury aren't stepping in and saying in order to protect the broader economy, we're going to impose a one-off windfall tax on these excessive profits, in order to allow the rest of the economy to function and get over this hump.
“The really frustrating thing is the long-term forecasts are [energy prices] are going to come down, forecasts are predicting to show the wholesale cost of energy by next summer will have fallen by 34%, and yet I'm being asked to sign up to these horrific prices and fix them for three years.
“This is a blip caused by a whole sector of factors, and the Government should be stepping in to help the economy get over it.”
Uncertain picture
The rise in cost of electricity has not only had an impact on Cussens soaring bills, in a bid to become more energy efficient, the operator recently ripped out all of the gas cooking equipment in the kitchen at one of his pubs and modernised it with electric induction cooking equipment but is now unable to do this at the further 3 sites as planned.
He said: “We tried to do the right thing, but now we're obviously consuming a lot more electricity, so not only are we paying more because the price has gone through the roof, but we're also using more because we've made the switch away from gas.
“It's such an uncertain picture, what this year is going to be like.
“I'm generally an optimist, but this is really a tricky one to try and to resolve.”
