Energy now the biggest operating cost after staff
The trade body said, unlike domestic energy users, businesses are not subject to the energy cap so are exposed to rising energy costs, having to fend for themselves with no support from the Government.
The surge has seen energy prices rise above rent and business rates combined.
An example cited by the NTIA showed one bar operator has seen energy costs rise from £35,000 (average of 13p to 18p per KWH) over the past two to three years to then more than double in the early part of this year to £85,000, which was unsustainable for the business.
It added, if the business were to renew today, quotes seen in the past week are more than 145p per KWH (which works out to between £150,000 and £200,000 per year), making the energy bills moving forward over 10 times the energy cost from two years ago.
Untenable position
The NTIA added the culmination of a range of escalating costs, from staffing, supply chain increases, PRS/PPL and insurance are placing businesses in an untenable position, with many facing closure over the coming months without intervention.
Energy suppliers are adding to the financial pressures for many industries by demanding unachievable commercial terms, like six-month security energy deposits to engage with new contracts, with few companies willing to take on new contracts for night-time economy businesses.
NTIA chief executive Michael Kill said: “Each day we are seeing businesses receive energy contract demands of between 300% and 1,000% of their current contract rates.
“The annual energy costs under new contracts for many will dwarf the combined cost of rent and business rates. Making energy the second biggest operating cost for night-time economy businesses, second only to workforce.”
Rescue package
Kill continued: “This is unsustainable. It is vital now the new Prime Minister and their administration act swiftly to implement a rescue package for businesses, which should include a reduction in VAT, extension of business rates relief and an energy cap for SME businesses.”
Night time economy adviser for Greater Manchester and chair of the NTIA Sacha Lord added: “The energy cost increases that businesses across the UK are experiencing are simply unsustainable. Without immediate intervention, I have no doubt we will see the closure of thousands of venues across the UK, an outcome that will have dire consequences for our country’s economic growth.
“This is the time for the current Prime Minister, chancellor and those in the running to come together as the leading party in Government and work with us to determine and announce solutions to this terrible crisis.”
