Industry figures urge the government to act over rising fuel prices
Five industry bodies representing the UK hospitality sectors have joined forces to write an open letter to HM Government calling for urgent action on energy prices.
UK Hospitality, The Night-Time Industries Association, Music Venue Trust, The British Institute of Innkeeping and The British Beer and Pub Association told the Government that “rocketing energy prices [are] a matter of existential emergency.”
I think it's important to speak honestly about struggles to help unite the clans
The energy crisis is making itself felt among all sectors of hospitality from pubs and restaurants to gig venues and hotels. Business energy bills are not protected by Ofgem’s price cap that protects consumer bills.
The letter sets out the urgent need for a comprehensive support package for the sector. Hospitality operators face an average annual bill increases in the region of at least 300%, meaning businesses and jobs in the sector are at grave risk.
Now or never for hospitality
Manchester’s Simon Wood told Sky News that four months ago, the gas bill for his restaurant Wood was £3,000, plus another £3,000 for electricity. Now it is £8,000 for each - a total of £16,000.
"That's £26 per person who comes through the door, roughly,” said the chef.
"Can you imagine if I popped £52 on a table of two before they've even come in and had a drink or a bite to eat?"
Recently, we spoke to Khan, the owner of a tiny long standing cafe Kadas in Leeds who told us, "I am a very small business owner [and in the] past five months, purely I feel the inflation and sometimes I'm losing here - not all the time, some weeks," which he said was getting even worse due to the energy crisis but that he was trying to keep price hikes minimal to hold onto custom.
While operators are forced to soak up much of the cost, inevitably the energy price rises push up the cost of a meal out for the consumer. Customers already concerned about their own cost of living issues will be less like to eat out, feeding into an already unstable situation for restaurants, cafes and pubs across the country.
Kate Nicholls, Chief Executive of UK Hospitality said: “Hundreds of hospitality businesses across the country are staring into an abyss of closure and possible failure, leading to thousands of job losses; so it’s now or never for Government help and support if this vital sector is to survive the extraordinary threats pushing much of it to the very brink of existence.”
Emma McClarkin, Chief Executive of the British Beer and Pub Association said, “Rising energy bills are putting pubs in real jeopardy. Sudden, extreme price hikes are already forcing publicans to make tough choices, from reducing opening hours to cutting options on their menus. We are experiencing a perfect storm that is not only shrinking but eradicating profitability margins. We urgently need an energy price cap for small businesses before extortionate bills cripple pubs and we lose them forever in communities across the country.”
An industry-wide issue
Restaurants and pubs are not the only businesses facing an “existential emergency”. Hotels, gig venues, nightclubs and their assorted suppliers will all feel immense pressure over the next few months or even years.
Mark Davyd, CEO of the Music Venue Trust said: "After two incredibly difficult years where venues have had to fight for simple survival, it would be an extraordinary outcome to see them closed and permanently lost because of an energy market that is completely out of control and not fit for purpose. The Government must act to create a genuinely functioning market for energy services that can deliver supply at a reasonable cost or step in to create an affordable supply for businesses".
Sacha Lord, the Night Time Economy Advisor for Greater Manchester, described the situation as a "perfect storm", adding: “Trading is now unviable for many and I believe we will see closures at an unprecedented level over the 12 months leading to unemployment on an unimaginable scale.”
“The speed at which the economic turmoil has devastated businesses in the sector is frightening and I am being contacted every day from landlords who are unable to continue to trade due to financial pressures.”
Mr Lord has promised to bring together a round table in the next few days to see how the situation can best be addressed in Greater Manchester.
Jennina O’Neill, chair of retail and leisure at Liverpool BID Company, says a range of measures need to come in to help businesses cope with increasing costs over the next six months.
“Business is being forgotten when it comes to the cost of living crisis and without support you could see closures and job losses at the start of 2023. Support throughout Covid kept many from closing their doors, but the increased costs as we head into Q4 and into the new year could see many fall off a cliff edge.
"In April this year we saw that Liverpool’s vacancy rate was 8.7%, below both the North West and national average. It would be devastating for the city centre to see a rise in vacancies because business was not supported in tackling this crisis."
The crisis is a culmination of issues that has hit the hospitality industry since the pandemic and the energy increases have been on the horizon for many months.
As far back as October 2021, Ancoats business The Hip Hop Chip Shop wrote about their increasing energy bills on their Facebook page: “It really could be the final nail in the coffin for thousands of small independent businesses operating on thin margins who aren't yet hitting pre-lockdown sales and may have unserviceable debts mounting up already.
“We'll keep on fighting but y'know it's pretty shit for a lot of ppl out there. I think it's important to speak honestly about struggles to help unite the clans to hold the government accountable if people will suffer because of their actions/inactions.”
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An Open Letter to HM Government
The below is an open letter from UK Hospitality, The Night-Time Industries Association, Music Venue Trust, The British Institute of Innkeeping and The British Beer and Pub Association.
Pubs, restaurants, music venues, nightclubs, hotels and wider hospitality have reached the point where the conditions for trading are so prohibitive that many venues are already reducing the hours they open their doors. Others are confronted with the threat of permanent closure. With chronic challenges in the supply chain, labour shortages, interest rates and inflation, rocketing energy prices have become a matter of existential emergency for businesses in our sector.
Hospitality operators face average annual bill increases in the region of at least 300%, putting at risk businesses and jobs. It is also increasingly clear that a significant number of energy providers have withdrawn service provision from the Hospitality market altogether. The primary purpose of a free market for energy supply to businesses is to create competition, which leads to improved services, competitive rates, resilient suppliers, and the ability to invest in long term and sustainable solutions to energy demand. In the Hospitality sector, there is unequivocal evidence that this primary purpose is failing. On Friday, the Government saw fit to declare a drought, in the face of inarguable evidence that weather conditions had caused a threat to the nation. The energy crisis is no less of a threat and deserves similar attention. Not all businesses will be able to survive this onslaught, and those that can will be closely considering how they can keep their costs down just to stay afloat.
Hospitality provides 10% of jobs and 5% of GDP. It can be a powerful driver of economic recovery and growth for the nation, but it urgently needs a kick start. Business and consumer confidence is suffering, and we urgently need the Government and the leadership contenders to outline a support package for the sector.
We urge you not to allow the stasis of party politics to stifle the urgent delivery of action on energy.