Thousands of UK pubs ‘face closure’ without
energy bills support
Government told mass job losses are inevitable in
absence of help, with sector still battling back from Covid
Rob Davies
@ByRobDavies
Tue 30 Aug
2022 06.00 BST
Thousands
of pubs face closure without urgent government support to soften the blow from
soaring energy bills, the beer industry has said, putting jobs at risk in a
sector still battling to recover from the Covid pandemic.
The bosses
of companies owning almost half of the UK’s 47,000 pubs said tenants were
already giving notice because they could not cope with energy bills, which are
due to rise more than fivefold in some cases.
Unlike
households, businesses do not benefit from a cap on what suppliers can charge
for gas and electricity, leaving many firms facing oblivion without state
intervention.
In a letter
to the government and the Conservative leadership candidates, Liz Truss and
Rishi Sunak, the British Beer and Pub Association said mass job losses were
inevitable in the absence of help for an industry that employs 940,000 people.
Nick
Mackenzie, the chief executive of the 3,100-strong pub chain Greene King, said
the energy bill blow had come just as the sector was battling back from the
ravages of the Covid-19 lockdowns, which hit hospitality particularly hard and
left many with punishing debts.
“While the
government has introduced measures to help households cope with this spike in
prices, businesses are having to face this alone, and it is only going to get
worse come the autumn,” Mackenzie said.
“Without
immediate government intervention to support the sector, we could face the
prospect of pubs being unable to pay their bills, jobs being lost and beloved
locals across the country forced to close their doors, meaning all the good
work done to keep pubs open during the pandemic could be wasted.”
His counterpart
at St Austell Brewery, Kevin Georgel, said thousands of pubs could be forced to
call last orders for good.
Chris
Jowsey, the chief executive of Admiral Taverns, said the impact was
frightening. He said: “One of our licensees reluctantly gave notice to leave
his pub after the cost of electricity increased by 450%, making it impossible
to trade profitably. Let’s not forget that for most licensees the pub is not
just their business but also their family home.”
Unlike
households, pubs and other small businesses typically buy their energy from
suppliers in long-term fixed-price contracts, which are often renewed at this
time of year for an October start date.
Some have
reported being told that their supplier is no longer willing to offer a
fixed-rate contract to hospitality businesses because they fear the customer
will go under. This leaves them on “deemed” out-of-contract rates, which can
soar in line with the wholesale markets.
Other pubs
have reported being told by their supplier to put down a £10,000 deposit if
they want a contract, or receiving quotes setting out a sixfold jump in their
energy costs.
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The squeeze
has been exacerbated by above-inflation rises in other costs, such as aluminium
for beer cans and carbon dioxide used in bottling and canning.
Mark Holden
runs three pubs across Cornwall, including the Norway Inn in Truro. He had a
long-term gas contract in place until November 2023, with estimated bills of
£5,800, until his supplier went under and he was put on an emergency contract
with a new supplier at £24,000.
By then, he
had invested in gas cookers, when otherwise he would have opted for induction
hobs.
“I think
this is going to be the biggest challenge this industry has come up against,
including the 2008-10 financial crisis and Covid. This will be something that
will knock those out of the park,” he said.
“As an
industry we’re heading towards a cliff edge in April, particularly if business
rates return to 100% with no support. That would be the death of the
industry.”
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