'Lights off' warning amid 'devastating' energy hike

By Rebecca Weller

- Last updated on GMT

Signal of more pain to come: energy regulator OFGEM confirms 80% increase to household energy price cap (Credit: Getty/J J D)
Signal of more pain to come: energy regulator OFGEM confirms 80% increase to household energy price cap (Credit: Getty/J J D)

Related tags Finance Legislation Ofgem Energy costs

An energy price cap hike has been described as “devastating” for the sector with many businesses at risk of facing “lights off” as consumers look to spend less in the on-trade.

The news comes as energy regulator OFGEM announced, on Friday 26 August, the cap on pricing for households would increase from £1,971 to £3,549 from Saturday 1 October – an increase of 80%. 

Night-time economy adviser for Greater Manchester Sacha Lord​ said via Twitter: “For months we’ve been calling for an energy price cap for businesses as well as households.  

“On the back of this morning’s news, the horse has already bolted. Now, without an urgent energy reduction [or] rebate, it will be lights off for many in my sector this winter.” 

OFGEM stated the increase reflected the continued rise to the cost of global wholesale gas, citing the pandemic and Russia’s invasion of Ukraine earlier this year as the causes.

More pain to come 

Furthermore, the regulator said it would work with the Government, consumer groups, charities and suppliers, in supporting any new package of help or measures to ease the energy crisis. 

UKHospitality (UKH) CEO Kate Nicholls tweeted: “Devastating 80% increase in energy​ price cap with regulator stating it is unable to do more to regulate prices in current market – there is no price cap for business, but this is a signal of more pain to come on commercial prices, hitting jobs and viability.” 

Consumer spending in the sector has already begun to fall due to the cost-of-living squeeze, with nearly three in 10 (29%) of 2,000 Brits surveyed by Barclaycard​ earlier this month having said they were looking to spend less on days out. 

Additionally, a further 55% of this group had planned to reduce spending in the on-trade. 

British Beer & Pub Association (BBPA) chief executive Emma McClarkin OBE said: “This extreme rise in energy costs will cause more damage to our industry than the pandemic did if nothing is done in the next few weeks, consumers will now be thinking even more carefully about where they spend their money.  

“There are pubs that weathered the storm of the past two years that now face closure because of rocketing energy bills for both themselves and their customers.  

Beating heart of communities 

“If we lose them, we not only lose businesses and the jobs that go with them, but also the beating heart of communities across the country where people gather in times of need. We need an energy cap for businesses as well before it’s too late.”  

Furthermore, Night Time Industries Association CEO Michael Kill labelled outgoing Prime Minister Boris Johnson as “arrogant” for suggesting hospitality businesses “weather the storm” when people across the sector have lost jobs and livelihoods as costs continue to increase across the board.  

Licensee of the Dog at Wingham, Canterbury, Marc Bridgen​, said: “We should all be talking about this and writing about it every day. 

“I've spoken to and have had very serious, worrying conversations with three of my senior staff and they are desperately worried about the rising utility bills​; they are worried as hell about it. 

“[There are] lots of hospitality businesses where the utilities​ are removing any profit from what they do, and, in some cases, taking most of what the owners are earning, there's a lot of hospitality businesses already at the cliff's edge." 

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