Hospitality trade bodies renew calls for government to tackle 'unfair' energy costs

30 May 2023 by
Hospitality trade bodies renew calls for government to tackle 'unfair' energy costs

Hospitality trade bodies have renewed their call on the government to intervene on ‘unfair' energy costs and contracts.

The British Beer and Pub Association (BBPA), UKHospitality (UKH), Hospitality Ulster and the British Institute of Innkeeping (BII) warned that businesses were on the brink of collapse.

An industry-wide survey by the groups found just 29% of hospitality businesses feel optimistic about the next 12 months.

Some 86% said energy costs were a main concern with the average bill up 81% since last year and triple the price it was in 2021.

Businesses forced into long-term fixed contracts between July and September 2022, when energy prices continued to rise, felt least optimistic about their prospects over the next year.

Of the businesses that locked into a contract at the peak of the energy crisis between July and September almost half (46%) felt their business was at risk of failure in the next 12 months, with 92% citing energy prices as a significant contributor to that risk.

These operators were also less likely to have cash reserves and almost half (46%) of all respondents had less than three months' worth.

The trade bodies previously wrote to the government to express their frustration that discussions over the issue had not led to "meaningful actions".

Hundreds of businesses have submitted evidence to regulator Ofgem revealing the behaviour of energy suppliers, but its ‘limited powers' have prevented it intervening in contracts, the trade bodies said.

They added: "Half of hospitality businesses were forced to sign new energy contracts when wholesale energy prices were at their highest, and when there was no effective competition in the market, due to a lack of energy suppliers willing to quote to hospitality businesses.

"This situation, coupled with the significant reduction in support under the Energy Bill Discount Scheme, now threatens the livelihood of many pubs and wider hospitality businesses. Their monthly bills will increase dramatically, by three to four times those of 2021. For many SMEs this will mean the demise of otherwise viable businesses, forcing thousands of job losses.

"In addition to the problems suffered by those on high- price contracts, the current market is also failing, with our members being impacted by poor behaviours from the few energy suppliers still willing to supply to hospitality.

"These include: continuing use of threatening and aggressive sales tactics; failing to pass on wholesale price reductions; refusing to provide flexibility to customers on the brink of bankruptcy; and huge, unjustifiable increases in non-commodity linked standing charges contrary to the fall in wholesale prices."

Last week Michelin-starred chef Aktar Islam told operators to be open about the difficulties they were facing as he called for government intervention to help the industry.

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