‘Rocketing energy bills killing pubs’

By Nikkie Thatcher

- Last updated on GMT

Urgent help required: British Institute of Innkeeping boss Steve Alton has written to the Government to ask for support amid rising energy costs
Urgent help required: British Institute of Innkeeping boss Steve Alton has written to the Government to ask for support amid rising energy costs

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Rapidly escalating energy bills are topping the list of headwinds facing pubs with operators seeing costs quadruple.

British Institute of Innkeeping (BII) CEO Steve Alton has written to the Chancellor and the Secretary of State for the Department of Business, Energy and Industrial Strategy (BEIS), outlining the impact the energy crisis​ is having on its members.

A recent survey from the trade body revealed rising energy costs was the having the biggest impact on profitability and since then, the crisis has escalated further.

With no cap on soaring prices for businesses, many BII members have reported hikes of 300% and more on their existing bills.

The BII estimated licensees need to trade at least a fifth (20%) more than pre-pandemic levels to stand still.

Remaining debt

However, it also showed three quarters were trading below 2019 figures with almost nine in 10 (86%) reporting lower profits from the already reduced revenue.

Additionally, many operators are also still paying off loans and other pandemic debts at an average of £40,000 per pub, according to the BII.

Alton said: “Our members have been working tirelessly to maintain pubs as accessible and affordable safe spaces for all, at the heart of their communities across the UK, absorbing as much of the inflationary costs placed on their businesses as possible.

“We have seen a sharp rise in calls to our helplines, with members uncertain of how to navigate the challenges facing them, the majority of whom are seeing unsustainable cost increases across every area of their businesses, but rising energy bills are the top concern at the moment.

“Even at the height of summer, the busiest time of year for pubs, licensees are now seriously considering the sustainability of their businesses, as the astronomical rising cost of business is undermining any recovery they may have already made.”

Urgent short-term support

He warned the huge impact of spiralling energy bills will be enough to destroy pubs and the community hubs they are.

“The crisis now facing our members is just as damaging as the impact of the pandemic. Without support, the rise in energy bills and further cost increases will cripple these viable businesses, risking lost jobs and careers, Government loans being written off, and the loss of essential, accessible places that connect us all in our communities,” Alton added.

“We have called on Government for urgent short-term support to allow these vital businesses, supporting local jobs and livelihoods in every community, to weather these exceptional costs of doing business. 

“They now urgently need immediate support with energy bills via grants and a cap on future increases, alongside a waiver of business rates for 2023/24 as well as a more meaningful cut to the differential rate of duty on beer applied to smaller container sizes.”

Furthermore, the trade body boss called for help for consumers to help stimulate spending and the economy.

He said: “Pubs are an essential component of growth, regeneration and levelling up across the UK and without support, their contribution to skilled jobs, local investment and supporting local suppliers will be lost, in many cases, forever. Government must act now to ensure the survival of these vital community businesses.”

The letter in full

Dear Chancellor & Secretary of State,

I wrote to you both in early July sharing the exceptional trading challenges that our 10,000 members are facing, independently operating pubs in every community of the UK.

I shared with you recent data from across our membership highlighting the underlying fragility of our members who are still battling pandemic specific issues such as minimal cash reserves, debt repayments and chronic staffing shortages limiting their ability to trade.

Many of our members are continuing to battle significant inflationary pressures with nearly half of our members seeing overall costs increase by over 20%.

They are working incredibly hard to contain the impact of these costs on pricing for their customers to ensure that they can continue to provide an accessible and affordable experience in every community.

Clearly they are not passing through the full impact of price increases leading to 86% of our members being significantly down on profit.

Through regular contact with our members, we have seen a continued escalation in energy prices for pubs.

The majority of our members are experiencing a minimum 300% increase in energy costs ​and a number have had their energy provider fail, resulting in their secured long-term contracts being waived.

The impact of this level of increase in costs renders many long-standing, successful pubs simply unviable.

Despite many of our members being fully engaged in busy summer trading they are contacting our support services in anticipation of their businesses failing in the short term.

We have consistently made the case for the areas of investment that will be needed to support these local businesses in every community through these exceptional trading circumstances.

Our members have shown incredible drive, adaptability and resilience having successfully navigated the challenges of the last two years and stand ready to provide growth in jobs, ongoing support for local suppliers and brewers, investment in local communities and continuing to provide a safe, accessible space for all to connect in their communities.

Urgent investment support is needed in following areas;

1. An energy price rise cap for pubs and grant support for increased costs​, protecting pubs with many incorporating accommodation

2. Full cancellation of business rates for 23/24, ​ahead of full reform and rebalancing with the digital economy

3. A significant draught beer and cider duty cut for pubs, ​20% reduction for a minimum container size of 20 litres

Our members also place huge value on the Government supporting wider consumer confidence and providing stimulus to customers to continue to come to hospitality through a reduced VAT rate for our sector.

Our members need urgent certainty to plan their now delayed recovery which will only happen over the coming years.

Without it, many will simply decide that they are unviable and be lost to their communities, with significant impact to local jobs, suppliers, investment and livelihoods.

Our pubs are foundational within the Governments plans on regeneration and levelling up and warrant your support.

As always, we would welcome any further engagement with you and your officials to ensure the investment proposals above are implemented to the benefit of the individual businesses, the wider economy and society as a whole, who value the key role our pubs play at the heart of every community.

Yours sincerely,

Steve Alton

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