Energy bills will force pubs to shut and are 'wiping out profits'

Sky-high energy bills will force pubs to shut and are ‘wiping out profits’ as landlords say electric and gas has risen by 300% – and campaigner warns seven out of 10 pubs WON’T make it through winter

  • Pubs and breweries warn they face going bust as energy costs continue to soar
  • Bosses of six of the UK’s biggest pub chains are asking for Government help
  • It comes amid stark warning that seven in 10 pubs will not make it to the winter  
  • Landlords are asking for measures such as an energy price cap for businesses

Soaring energy bills will force pubs to close and are wiping out profits, a brewery boss has warned, as landlords say electric and gas prices have risen 300 per cent.

Small businesses are facing a crisis with soaring energy bills driving up operating costs and making it impossible for some owners to remain viable.

In an open letter today, bosses of six of the UK’s biggest pub and brewing companies called on the Government to act now to avoid ‘real and serious irreversible’ damage to the sector.

This could include introducing an energy price cap for businesses – similar to the cap set for households. 

Andrew Turner, chief operating officer of St Austell Brewery, today said he had heard from one tenant who has seen their energy bills soar by more than 400 per cent in the last week.

He told Sky News: ‘Unlike consumers, there is no energy price cap for small businesses therefore we are seeing spiralling costs for our tenants, pubs, and breweries.

‘It is totally wiping out the profits they are making, which questions why on earth they would want to open their doors going forward.’

Sasha Lord, night time economy advisor for Greater Manchester, also warned today that seven in ten pubs will not make it to winter if there is no intervention to assist with soaring bills.

Darren Nash (right), landlord of the Red Lion pub in Cricklade, Wiltshire, has detailed the soaring energy prices he now faces

Emma McClarkin, chief executive of the British Beer & Pub Association, also joined calls for financial support to give pubs ‘essential headroom’

Customers drink beer at the bar of the Signature Brew brewery in east London earlier this month

He told LBC: ‘We are just desperate. It should have been a relaxing bank holiday weekend, but there is fear, the anxiety, the stress that is running across the whole of the UK. We are the fifth biggest industry. 

‘We are in a far worse position now than we were during the pandemic. At least there was some support then. We are just freewheeling into a cliff edge.

‘We will reach a moment where it is too late. Seven out of ten pubs will not make the winter if nothing is done.’

Without any small business alternative to the consumer price cap, operators could face runaway energy costs as the price of gas continues to surge.

Mr Turner has called on the Government to provide greater leadership to avoid the potentially ‘catastrophic’ situation.

He continued: ‘At the moment, it feels like we are sat in the ether, with no significant leader at the top to make decisions.

‘We need the Government to step forward to make decisions, to support our sector, and make sure such a cornerstone of UK business can get through this tough time.’

The King Charles I pub near King’s Cross, north London, is expecting around a 400 per cent increase in the price of its energy bill, while the pub is already paying around 12 per cent more for a barrel of beer compared to last year.

One of the pub’s directors, Paul Butler, said that though they were confident that they would be able to survive the next few months, he admitted ‘it’s going be a bit of a squeeze’.

Mr Butler said: ‘The brewers are obviously suffering the same increases as we are. In addition to that, they’ve got cost increases in the price of grain which is feeding through to us.

‘So we’ve got cost pressures not only on our personal heating and lighting bills and that sort of thing, but also that’s impacted our wholesalers as well.”

He added: ‘We’re going to try and pass some of the increases onto our customers, but I don’t think we can pass it all on.

‘I don’t think our customers could probably stomach a sort of 15% rise in the cost of a pint or the cost of a glass of wine.’

Mr Butler expressed the desire to keep the ‘community spirit and atmosphere’ of the pub going, adding: ‘I don’t want to price people out of the market. I’d rather keep turnover going than to put their prices up to a point where we don’t get that sort of atmosphere.’  

Darren Nash, landlord of the Red Lion pub in Cricklade, Wiltshire, also detailed the soaring prices he now faces.

In an open letter, bosses of six of the UK’s biggest pub and brewing companies called on the Government to act now to avoid ‘real and serious irreversible’ damage to the sector

The fermentation vessels at Exale Brewing and Taproom in east London earlier this month as pubs are said to be under threat of closure across the UK

He said: ‘We are looking at a 250 to 300 per cent increase in electric and gas over the next six months. We are around about £2,000 a month give or take for electricity – that is going to go up to about £1,000 a week.

‘Covid was tough, but I don’t think it was anything as tough as what we have coming. At least during Covid we could still do takeaways and all that sort of thing, but that is all out of our hands now. It is down to prices that are way, way above us.’

Emma McClarkin, chief executive of the British Beer & Pub Association, also joined calls for financial support to give pubs ‘essential headroom’.

She said: ‘We are desperately calling for action from the government to give us an energy cap for small businesses and to do a long-term plan with hospitality so we can save pubs and brewers at the heart of our communities by making sure they are taking action to give them essential headroom like cutting VAT, business rates and keeping beer duty low.’

St Austell Brewery along with Greene King, JW Lees, Carlsberg Marston’s, Admiral Taverns and Drake & Morgan all sent the urgent warning.

A Government spokesperson said today: ‘No government can control the global factors pushing up the price of energy and other business costs, but we will continue to support the hospitality sector in navigating the months ahead.’

Separately a group of more than 750 takeaway owners have written to the Government requesting urgent support to prevent mass closures.

The British Takeaway Campaign is calling for a cut to VAT, grants to help with energy bills as well as tax rebates and a blitz of red tape hamstringing smaller operators.

Out-of-control gas prices following the invasion of Ukraine by Russia have contributed to rocketing energy bills for operators.

On Friday, regulator Ofgem confirmed that bills for an average UK household would surge by 80 per cent in October when the new price cap comes into force.

But businesses operate without a regulated price cap, with some pub owners warning that their bills have quadrupled or they are struggling to even find suppliers willing to power their venues when contracts come up for renewal.

Nick Mackenzie, chief executive of the 2,700-strong Greene King pub group, said one tenant has seen their energy bill jump £33,000 for the year.

He 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.’

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