Sector left to face energy crisis 'alone'

By Rebecca Weller

- Last updated on GMT

Only going to get worse: leaders from across the sector urge Gov to support industry before it's too late as energy costs continue to soar (Credit: Getty/sturti)
Only going to get worse: leaders from across the sector urge Gov to support industry before it's too late as energy costs continue to soar (Credit: Getty/sturti)

Related tags Finance Multi-site pub operators Legislation Energy costs

Leaders from across the sector have signed an open letter to the Government warning SMEs will close and jobs lost if immediate action isn’t taken on "unsustainable" energy bills for businesses.

Representatives from six companies, who make up the Board of the British Beer & Pub Association (BBPA), came together to raise alarm of the irreversible damage the energy crisis​ could cause without an urgent support package to cap the price of energy for businesses.

St Austell Brewery chief executive Kevin Georgel said: “The cost of energy ​threatens to cause mass business failure and the loss of thousands of pubs across the country. One of our tenants, whose current gas contract is ending next week, was yesterday quoted a 417% increase on what he currently pays for a one-year fixed price deal.

“It’s unsustainable for publicans to run their businesses in this climate and increases of this scale will more than wipe out the entire profits of the business.

“Pubs bring people together and play a critical role in their community and British beer is part of our rich heritage. The market is failing our sector and we need an energy ​price cap for hospitality before this crisis forces our licensees to close their pubs.

“The Government ​rightly stepped up and helped our sector during the pandemic. This investment in the survival and long-term recovery of the British pub and brewing sector is now at serious risk, unless some urgent and meaningful intervention comes soon.”

Georgel continued St Austell was “hugely concerned” for its licensees who were paying extortionate energy fees while some had struggled to find an energy supplier willing to provide a contract for a pub amid the “perfect storm” of rising energy costs, inflation, and reduced trade​.

Only going to get worse 

For some, soaring energy costs have already proved too much ​to bear, with Admiral Taverns chief executive Chris Jowsey having stated one of the pub company’s licensees had reluctantly given notice to leave his pub after a “truly terrifying” 450% increase in electricity costs.

Jowsey added: “Let’s not forget for most licensees, the pub is not just their business but also their family home.

“I raised this issue with Minister’s more than six months ago, but the Government has failed to act. A small business price cap is essential if we want to retain local pubs and the jobs and the support they provide to their communities across the UK.”

JW Lees managing director echoed this, stating pub tenants have raised concerns businesses do not stack up with energy ​at these costs with some of the pub company’s sites having been quoted increases in excess of 300% for energy bills.

Furthermore, Greene King chief executive Nick Mackenzie explained some its pubs had reported price rises of £33,000 a year.

He added: “While the Government has introduced measures to help households cope with this spike in prices, businesses are having to face this alone​, and it is only going to get worse come the autumn.

“Without immediate government intervention to support the sector, we could face the prospect of pubs being unable to pay their bills, jobs being lost and beloved locals across the country forced to close their doors, meaning all the good work done to keep pubs open during the pandemic could be wasted.”

Beating heart of communities 

However, the letter also raised concerns regarding an increase in labour and aluminium costs, posing a "grave" risk to the nations craft and cask ale breweries.

Carlsberg Marstons chief executive officer Paul Davies said: “The UK’s brewing industry is facing a crisis far graver than the Covid lockdowns of the past few years.

“We have seen surging commodity prices and a doubling in the cost of malt, as well as C02, gas and energy costs nearly tripling since 2019. On top of all this, our industry has felt the impact of an over 50% rise in aluminium costs for cans, plus rising labour costs​.

“Without immediate, direct Government support, many of the UK’s craft and cask ale breweries will have no choice but to close for good. We are going to lose in one winter, generations of iconic beer brands.”

Additionally, BBPA chief executive Emma McClarkin OBE stated the rise in energy costs would “cause more damage” than the pandemic if nothing was put in place to support the sector in the next few weeks.

McClarkin added: “Consumers will be thinking even more carefully about where they spend their money. There are pubs that weathered the storm of the past two years which now face closure because of rocketing energy ​bills for both them and their customers.

“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 before it’s too late.”

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