Warnings of thousands more closures without help

06-Feb-2023 - Last updated on 06-Feb-2023 at 10:27 GMT

Research reveals: a recent survey showed 16% of trade body members have no cash reserves (image: Getty/georgeclerk)

A number of trade bodies have warned there will be further pub closures if the Government doesn’t step in to help businesses battle ‘devastating energy costs’.

The British Institute of Innkeeping (BII), the British Beer & Pub Association (BBPA), UKHospitality (UKH) and Hospitality Ulster have written to business secretary Grant Shapps, calling for further support for vulnerable pubs, brewers and operators.

Following research from AlixPartners and CGA by Nielsen IQ that revealed almost 18 licensed premises closed every day in the fourth quarter of 2022, the associations issued a stark warning about the thousands more potential business failures without further support.

Furthermore, results from a recent survey of BII, UKH, BBPA and Hospitality Ulster members showed one in three firms were at risk of failure in the next 12 months.

It also revealed 16% of members have no cash reserves and almost a quarter (23%) with fewer than three months’ reserves left.

Countless challenges

The Government’s Energy Bill Relief Scheme (EBRS) will close in its current form at the end of March, leaving operators with little to no support from its replacement – the Energy Bill Discount Scheme (EBDS).

The trade bodies estimated the change means businesses will be facing bills of at least three and a half times that of the equivalent period in 2022.

The latest letter followed a call from the BBPA for an inquiry into reports of poor conduct from energy suppliers.

A joint statement from the organisations said: “Hospitality businesses have faced countless challenges over the past three year, being the first to close and last to open in the pandemic, battling against soaring inflation in every area of their business and more recently, huge disruption caused by industrial action.

“[The] Government has previously intervened to support our sector, recognising the tangible social value we provide but if they fail to act at this crucial time, these essential businesses providing so much in our communities, villages, towns and cities will be lost forever.

“Spiralling energy costs and having to commit to long-term contracts at eye-watering rates, now represents the single biggest threat to their survival. 50% of respondents to the joint survey have had to renew their energy contracts in the last six months of 2022, at a time when prices were unfairly high in a non-competitive market.”

Catastrophic results

The statement called on Shapps to recognise the situation facing the hospitality sector and the communities they support.

It added: “[The] Government must ensure suppliers deliver a framework of fair and reasonable energy costs for hospitality businesses and direct energy companies to allow those who were forced into contracts in 2022 at untenable rates to renegotiate, reflecting the now much lower wholesale prices but also the record-breaking profits these suppliers have announced.

“Formally recognising our sector as an energy intensive and vulnerable area of the economy, as it has been throughout the pandemic and beyond, would also allow them access to the enhanced support under the EBDS.

“Without this, thousands of otherwise viable businesses at the heart of their communities will be lost, along with local, flexible skilled employment.

“The growth [the] Government needs can and will come from our sector but without the support on energy bills the results will be catastrophic.”