British Beer and Pub Association (BBPA) urges Government to ensure suppliers offer a renegotiation window for pubs and breweries locked into extortionate energy contracts.
Pubs across the country are nervously awaiting the 1 April when the average energy bill for a pub will rise by £18,400 a year, after the Government’s energy relief for businesses ends.
The end of the Energy Bill Relief Scheme, which came into force in November 2022, will add further pressure to a sector that is struggling to retain profit margins, with over 560 pubs closing their doors throughout 2022, more than during each year of the pandemic.
The BBPA is urging the Government to insist suppliers offer a window for renegotiation to allow businesses locked into sky high rates to recover their cost base.
Joanne Farrell who runs The Windsor Castle near Stockport said:
“When energy costs rocketed my bills went up threefold, the end of the support will see them rise even further. I’ve run this pub for 15 years, but this is the toughest it’s ever been to keep it going.
“I’m doing absolutely everything I can to save on energy costs, but I also want my pub to remain a welcoming and warm place local people can enjoy. I’ve installed a wood burner which saves me money and I’m hoovering in the dark so I’m not paying for electricity when there’s no customers in.”
The Association’s urgent call follows a longer-term ask made at the end of January for a Government inquiry to investigate poor practice by suppliers. The BBPA called on the Business and Treasury Select Committees to act, following reports from publicans and brewers there were sharp increases in non-energy costs being layered onto bills, harsh new terms and conditions, requirements for enormous up-front security deposits and in some cases flat out refusing to contract with hospitality businesses at all.
Emma McClarkin, Chief Executive of the British Beer and Pub Association said:
“This has been a critical issue for our sector for far too long and as the 1st April draws closer we have reached a point where businesses have nowhere left to go, as costs increase, and their profit margins are completely erased.
“Last week the Government extended energy support for consumers but left businesses out in the cold, in doing so the Chancellor recognised the UK’s energy market is broken but to date has done little to fix it. As a result, pubs and breweries are now doing all they can to prepare for an extreme hike in costs come 1st April, with some expected to pay almost £20k more for their bills than the day before.
“If these costs were passed on at the bar it would push prices for customers through the roof. Our pubs and brewers are doing everything they can to limit the impact of these baked-in higher costs on consumers but it’s becoming increasingly difficult to do so.
“With no action on energy for businesses, the simple fact is thousands of our pubs and brewers will be at risk of closure come 1st April and will be lost from communities across the country forever.
“We need the Government to step in give businesses in the “pain zone” of sky-high contract rates a window to renegotiate and bring those costs down. It’s clear a fair and sustainable energy market for businesses as well as consumers is needed before it’s too late.”
