Gov support needed in ‘nightmarish’ utility crisis

By Amelie Maurice-Jones

- Last updated on GMT

Businesses in distress: Operators worry as energy prices soar (Getty/ Luis Alvarez)
Businesses in distress: Operators worry as energy prices soar (Getty/ Luis Alvarez)

Related tags Finance Multi-site pub operators

Pub operators have called for Government support after soaring energy bills plunge the sector into a “dire situation”.

This comes after a survey by The Morning Advertiser​ showed nearly three quarters of operators did not expect to make it through the winter without Government intervention.  

More than 65% reported utility costs increase by more than 100%, with 30% reporting a leap of 200% and 8% reporting rises of more than 500%. Nearly 80% of operators said they could not afford the increase in energy costs. 

The Duncombe Arms in Ellastone, Ashbourne, newly appointed head chef Scott Law believed the energy crisis was unlikely to be resolved as long as the war in Ukraine continued, as this was putting pressure on gas prices. 

“Once again, the crisis seems to have come as a bit of a shock to the Government, like the fallout of Brexit and the Covid pandemic. So, we are reacting to as opposed to being ahead of the problem.  

“Understandably, the invasion of a country and the following domino effect is hard to predict, but as the energy companies continue to make profits and the public continue to struggle, it’s not a good look.” 

Skyrocketing prices

The real worry, according to Law, was how tightening consumer budgets would affect the catering industry. He said: “Food prices are skyrocketing, and businesses will have to pass that cost on or face not making margins to pay staff and suppliers.  

“The lack of a cabinet minister or representative for [hospitality], which is the country’s third highest employment sector, after the last three years is still beggar’s belief.” 

Gareth Ostick, the White Swan at Fence in Burnley co-owner, agreed that the situation was “a bit of a nightmare”. He continued: “I feel like we’ve been let down by Government ​for this to have been allowed to happen. It’s not just the business I’m worried about, it’s my house, my family and my staff.  

“[Parliament] has a responsibility to keep the economy going. Obviously there’s always going to be ups and downs, but what’s happening now is beyond anybody’s control, and it shouldn’t have got to that stage. 

“I need someone to help me and offer assistance, and that can’t be my next-door neighbour, a customer, or a pub down the road, the help has to come from Government. 

“It’s worrying, not just for the industry, but for everybody.” 

Difficult period

While Ostick didn’t believe in Government handouts, he recalled the lowering of VAT during Covid as a great help during lockdown and thought it could help with the current situation.  

For the Rising Sun, Truro, Cornwall owner and chef Thomas Hannon, the energy crisis had been very difficult for a long period of time. Despite this, he had seen whopping increases in the past year. For instance, the cost to fill up an oil tank in January was £600 versus nearly £1,000 in March. 

He said gas, electricity and oil prices had been on the rise since last year for businesses, and it had only captured public attention now, as the problem filtered through to people’s homes. 

Hannon believed it wasn’t just spikes in price that were the issue, but the fact the landscape of the situation was constantly changing, whereas 50 to 60 years ago the market was more stable. 

Government needed to create a short-term and a long-term strategy to help businesses and families, according to the chef. Helping families meant consumers could build back their disposable income and would be more likely to dine out. 

“It’s very difficult to tell everyone there’s an energy crisis when the energy companies keep making record profits,” said Hannon, and believed Government had allowed these companies to “run wild and do what they want” for a while.  

He suggested that a windfall tax on energy companies, or dropping VAT for hospitality businesses, could help mitigate the issue. What’s more, he thought Government could invest more in producing UK-based energy resources. 

Hannon added: “The Government needs to think long-term about our energy usage and who we get energy from, but in the interim, they need to do something now.” 

Wide impact

The Greyhound, Beaconsfield, co-owner Daniel Crump, who had seem energy quotes for almost double the pub’s annual spend, said: “This is clearly impacting everybody, not just businesses but consumers too who will be more out of pocket and are likely to spend less.” 

He said the situation seemed similar to the pandemic, where people across the sector were talking about it constantly and concerned about the impact it would have on trade. 

“Like Covid, we will see more businesses in the sector succumb to the increasing cost pressures,” he added. “It’s a pretty dire situation.” 

Crump said businesses were being forced to commit to long-term higher fixed deals by energy suppliers to keep costs as low as possible.  

Due to this, he believed the industry could not wait much longer to find out if the Government plans to offer support. He said: “We need action and decisions now. We’ve already been hit massively through Covid, now this.” 

Related topics Rebuilding the Pub Sector

Related news

Show more