Thousands of pubs face closure without urgent government support to soften the blow of rising energy bills, the brewing industry has said, putting jobs at risk in a sector still struggling to recover of the Covid pandemic.
Bosses at companies that own almost half of the UK’s 47,000 pubs said tenants were already giving notice because they could not cope with energy bills, which in some cases were set to rise fivefold.
Unlike households, businesses do not benefit from a cap on what suppliers can charge for gas and electricity, so many businesses face oblivion without state intervention.
In a letter to the government and Tory leadership candidates Liz Truss and Rishi Sunak, the British Beer and Pub Association said massive 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 hit had come just as the sector was battling the ravages of the Covid-19 lockdowns, which particularly hit hospitality and left many punished. debts
“While the government has introduced measures to help households cope with this price increase, businesses have to face it alone, and it’s only going to get worse from the autumn,” Mackenzie said.
“Without immediate government intervention to support the sector, we could face the possibility of pubs not being able to pay their bills, jobs being lost and beloved venues across the country being forced to close their doors, it is meaning all the good work done to keep pubs open during the pandemic could go to waste.”
His counterpart at St Austell Brewery, Kevin Georgel, said thousands of pubs could be forced to take back orders permanently.
Chris Jowsey, the chief executive of Admiral Taverns, said the impact was terrifying. He said: “One of our licensees reluctantly gave notice to leave his pub after the cost of electricity rose by 450%, making it impossible to trade profitably. Let’s not forget that for most licensees , the pub is not only their business, but also their family home.”
Unlike households, pubs and other small businesses usually buy their energy from suppliers on long-term fixed-price contracts, which are often renewed at this time of year for an October start date.
Some have reported being told 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 with “presumed” out-of-contract rates, which can shoot up in line with wholesale markets.
Other pubs have reported being told by their supplier to put down a £10,000 deposit if they want a contract, or being given quotes showing a six-fold jump in their energy costs.
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I thought I might update you on the latest ‘best’ energy deal available for a pub of our size.
We paid 15 p/unit in May. This is the best quote available today. pic.twitter.com/2r5HmCcKns
— The Rose and Crown (@RoseAndCrownBeb) August 27, 2022
The pressure has been compounded by above-inflation increases in other costs, such as aluminum for beer cans and carbon dioxide used in bottling and canning.
Mark Holden runs three pubs in Cornwall, including the Norway Inn in Truro. He had a long-term gas contract in place until November 2023, with bills estimated at £5,800, until his supplier went under and he was put on an emergency contract with a new supplier at £24,000.
By then, I had already invested in gas cookers, when I would have otherwise opted for induction hobs.
“I think this is going to be the biggest challenge this industry has faced, including the financial crisis of 2008-10 and Covid. This is going to be something that knocks them out of the park,” he said.
“As an industry, we are heading for the edge of the cliff in April, especially if trade rates go back to 100% without support. That would be the death of the industry.”