Energy bill cap welcomed by hospitality but more support still needed

Energy bills for UK businesses are expected to be cut by around half their predicted level this winter under a huge government support package.

The plans announced by the government will fix gas and electricity prices for companies for six months from 1 October, in a bid to protect firms from soaring energy bills. 

The scheme will apply companies which had agreed fixed deals at higher prices on or after 1 April, when energy bills started to surge. The government also confirmed that those on variable and flexible tariffs will also be eligible.

Companies do not need to contact suppliers as the discount will automatically be applied to their bills, with savings seen from October but received from November.

Industry groups welcomed the package but warned further support may be needed after the winter.

Commenting on the plans, UKHospitality said: "Today’s announcement will give businesses some confidence to plan for immediate survival"

"The levers of reduced VAT and business rates reliefs are still available to the Government, and there must also be a comprehensive package to ensure that there is no cliff edge when these measures fall away," the group added.

In response to the plans to help cut energy bills for businesses, announced today, UKH CEO, @UKHospKate said: “We are relieved that the Government has listened to the representations that UKHospitality has stridently delivered, relating to the problems with energy suppliers."

— UKHospitality (@UKHofficial) September 21, 2022

Today's measures come after the Prime Minister outlined her plans to support businesses and prevent further closures resulting from increased energy costs, after she revealed typical households would pay no more than £2,500 a year, for the next two years from October.

“I’M LUCKY TO HAVE ONLY HAD A 400% RISE IN MY UTILITIES”

Discussing how his energy prices have risen, David Moore Owner of the Michelin-starred Pied à Terre, explained how he was now having to foot a 400% increase in his energy bills.

He said: “We just had a reassessment of our utilities, and we find that we are lucky with only a 400% rise. 400% means that we've gone from paying £26,000 in a year for utilities up to just under a shade under £100,000, and we are told by the brokers that we are lucky.”

When asked what measures he would like to see introduced by the government, David called for a relaxing around laws preventing EU nationals working across hospitality.

He said: “We need to go unilaterally on work visas for hospitality, let's include the NHS and let's include the care industry, but these industries need people and they're just not there. We can't find them.”

It comes after the government announced they had “no plans” to introduce a hospitality visa for EU workers looking to seek work in the UK despite the petition receiving significant support.

Highlighting the lack of communication between hospitality and government David said: “I would like them to talk to us, I have said it time and time again, it’s not about listening to us but it's coming and talking to us and seeing what it is we actually need.”

He added: “I can't imagine Sadiq Khan picking up the phone and saying to David Moore, ‘What do you need?’ I can't imagine Boris Johnson [speaking to] some of the big boys with 1000s of employees and hundreds of restaurants, ‘What do you need?’ no one is asking us what we need.”

Discussing other measures, the industry would benefit from, David explained there still too much red tape in the industry despite past commitments that Brexit would fix this issue.

“I didn't vote for Brexit but now we're here let's try and take some advantage from it,” expressed David.

He added: “Business rates, employment restrictions, no increase for like 24 months on minimum wage. Stay away from further legislation on service charge. Get rid of as many EU regulations as you can. Do the shit they talked about doing because of Brexit.”

LIGHTS OUT OVER CHRISTMAS FOR SCOTLAND

Over the weekend, the Herald newspaper reported that Scotland’s hospitality sector is at risk of “going dark” this winter if the support pledged by government to support the industry through the cost crisis is not delivered as urgently as possible.

The report went on warned that Scottish venues risk remaining closed over Christmas and Hogmanay if uncertainty and a lack of action continue.

The article referenced a recent survey by UKHospitality, which found that 60% of its members were looking to cut back on trading hours, or close at certain parts of the week or times of the year, with four in ten businesses in Scotland had cut their headcount.

The survey identified that one in five of respondents said they were no longer viable and did not think their business could survive the winter without additional support.

LAST ORDERS FOR THE GREAT BRITISH PUB

The news follows reports of bosses representing over 47,000 pubs across Britain wrote to the government asking for vital state support for business across the industry.

In their letter, representatives from the British Beer and Pub Association warned that mass job losses were inevitable unless support was granted creating uncertainty for more 940,000 workers across the country. 

🔴No action on energy for businesses could lead to serious and irreversible damage to the brewing and pub sector.

We have written to the Gov alongside six UK brewing and pub businesses calling for URGENT action on energy. 1/2https://t.co/7cJc2ChkBj

— British Beer & Pub Association (@beerandpub) August 30, 2022

Meanwhile, Brewdog CEO James Watt has called for emergency tax relief for the hospitality industry as pubs battle the “genuinely existential threat” of rising energy bills.

The Scottish brewer and bar group announced it would be closing six outlets across the UK, including three in London, due to elevated headwinds.

In a post on LinkedIn, James said: “I am deeply passionate about our business and our industry. If I can use the platform, I am fortunate enough to have to raise awareness of the genuinely existential threat to our industry, then I will put my neck on the line to do so every single time.”

What I feel the government could do to help protect millions of jobs in hospitality.

An article I wrote today on @LinkedInhttps://t.co/RnkcmsRaVJ pic.twitter.com/aF4SuPax0V

— James Watt (@BrewDogJames) September 4, 2022

As well as emergency tax relief, the Brewdog CEO went on to call for; a reversal to the rise in employers’ national insurance contributions introduced in April, scrapping or a reduction in business rates, a “VAT holiday for hospitality for a year”, state-backed loans and extension to the household energy cap approach by “implementing an energy price cap for businesses as soon as is practically possible".

AN INDUSTRY IN CRISIS

The renewed calls from leaders within the beer and pub industry follow reported closures resulting from huge increases in energy bills from businesses across Britain’s hospitality sector.

The Foxhall Inn, in Stockton, is one of many businesses to close their doors following the ongoing cost of living crisis.

In a statement on their social media, the pub announced that: “We are very sad to say the doors have been closed for last time for.”

They added that: “We would like to say thank you all our amazing customers, suppliers and most of all to Kevin (@kevin_dodd_fishing_yorkshire) and our fabulous team who helped keep the business going until the last hour.

 

 

 

 

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A post shared by Fox Hall Inn (@thefoxhallinn)

Businesses that have remained open have reported huge rises in energy bills with fears that more closures are inevitable particularly with VAT and business rates remaining at the same level.

For James Allcock, Owner of the Pig and Whistle, the rise in his bistro’s annual bills represent a rise from £3,000 to £23,000 representing a 700% annual increase.

my current energy bill for my tiny 22 cover restaurant is £2,928 a year. This is my new quote. Unsure what to actually do next but as a business that cost would now be more than I pay in rent and more than I take some months. I simply don’t have the money for this. pic.twitter.com/D8zPbOBNQI

— James Allcock (@jrmallcock) September 2, 2022

Speaking to The Staff Canteen, James explained how the price rise has meant his energy bills are now some of the biggest costs his business has to pay.

“That's now gone from one of our smallest bills to our third largest bill, just under our VAT, so it's essentially it’s the joint second largest bill in the restaurant behind our wages,” explained James.

He added: “It’s more than our rents, which considering we're in central Beverly in a really desirable location, just shows how far this has got out of whack with what things cost to do business.”

For many hospitality owners with similar sized businesses as The Pig and Whistle, the rate at which energy bills have risen overshadow what businesses are making, with closure or a reduction in hours considered as a result.

Commenting on this James said: "That payment is inordinate. It's gone from £244 to £1909 a month, which is just a simply unaffordable amount of money for my business.”

He added: “If I had the money and that level of profit and cash in the business, I probably would just pay it reluctantly pay because twenty grand is a lot of money. But I probably would just pay it because that's just the way life is. But we simply don't make that amount of money.”

 

 

 

 

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A post shared by James Allcock (@jamesallcockchef)

When asked about what measures he’d like to see introduced to reduce the impact of the cost-of-living crisis on businesses across the industry, he explained: “They need to reduce VAT on food, to at least 5% and on alcohol to 10% for wet lead pubs that got left behind and the last range of measures.

It might sound drastic, but at the end of the VAT for hospitality has been overtaxed for years we've been campaigning for this before the word COVID even existed.”