The SLTA (Scottish Licensed Trade Association) has expressed “very serious concerns” over the introduction of a new £5.5 billion scheme to support businesses with their energy, announced in the House of Commons.
With the current cap on the wholesale unit cost of electricity and gas for firms set to expire at the end of March, it will be replaced with a new scheme that offers a discount on wholesale prices rather than a fixed price.
Colin Wilkinson, SLTA managing director, said that struggling hospitality businesses were desperate for financial support and queried how effective this new scheme will be, given the vastly reduced reduction in the level of support at a time when businesses are recovering from the pandemic and still paying off debts incurred during Covid.
He said: “Many businesses in the hospitality sector in Scotland have had a bitterly disappointing December – normally one of the year’s key trading periods for the sector – as a direct result of the economic crisis, train strikes, poor late-night public transport and lack of taxi provision in some towns and cities. We’re into the second week of January and these challenges remain.
“So, to hear that the current energy scheme is to be replaced with one that offers a discount on wholesale prices rather than a fixed cap price means that businesses will receive a vastly reduced level of support – understandably, we have very serious concerns about the impact this will have on the hospitality sector.
“Obviously we are grateful for any government support but this new Energy Bills Discount Scheme does not, in our view, offer much hope for vulnerable sectors like hospitality when you consider that energy costs now account for around 8-10% of turnover for an average pub or bar. Energy is the second-highest cost for hospitality venues.
“The cost of this scheme, at £5.5bn, is not insignificant but when you drill down into the detail, small businesses in particular will not be much better off. James Cartlidge, the Exchequer Secretary to the Treasury, said that discount would be the equivalent to a £2,300 saving for a pub and of course every little bit helps. But it’s not nearly enough.
“We said before Christmas that we know of many businesses set to close permanently amid the cost-of-living crisis and other ongoing pressures and there is also that other elephant in the room – the fact that we urgently need meaningful intervention on business rates.”