Energy bill support cut will be ‘last straw’ for some hospitality businesses

Hospitality trade bodies have responded to the cut in energy bill support from April, saying it is “unsustainable” and will be “the last straw” for some businesses.

The government announced that it would continue to subsidise businesses' energy costs until 31 March 2024, but the rate of support will be reduced from April 2023.

UKHospitality chief executive Kate Nicholls said the extension was “crucial”, however the new, lower level of support will see a total £4.5b hike in bills for the sector compared to the previous scheme. “This will simply be unsustainable for many,” she said, urging the government to consider other measures such as increasing the business rates relief cap.

Michael Kill, chief executive of the Night-Time Industries Association (NTIA) said the government was “out of touch” following the announcement.

“Even under the current relief scheme, greedy, profiteering energy companies are subjecting businesses to over 400% increase on previous energy bills. All of this in light of the fact that gas/oil wholesale prices in recent months have dropped below the levels prior to Russia's invasion of Ukraine,” he said.

“The scaling back of the energy relief scheme by government at the end of April, will without doubt mean thousands of businesses and jobs will be lost in the coming months.”

Meanwhile, Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), said the reduction in support was “extremely worrying” and that price increases would be “the last straw” for some businesses to remain solvent and also called for the Chancellor to explore how additional support could be provided to vulnerable businesses.

“It is also vitally important that the government works with the regulator to crack down on supplier bad practice, which continues to increase their energy costs and hamper many businesses in our sector,” she added. Representatives called for “a concerted change in behaviour” by energy suppliers, with businesses hit by price hikes and even refused contracts, while UKHospitality added some had experienced “unjustifiable demands for enormous deposits or pre-payments”.

“This scheme is a significant investment from the Government and energy suppliers should not be using that as an excuse to hike up prices,” said Nicholls. “The Ofgem review into the non-domestic market should serve as a wake-up call to suppliers that now is the time to be reasonable with the quotes they’re offering and to abandon unfair demands of businesses to secure fixed deals. They should also consider allowing businesses to renegotiate if they are stuck on previously agreed, inflated fixed deals.”