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Pubs and restaurants warn of winter closures as energy bills soar 300pc

·4-min read
Pubs and restaurants warn of winter closures as energy bills soar 300pc
Pubs and restaurants warn of winter closures as energy bills soar 300pc

Pub, restaurant and hotel chiefs have warned the industry could face mass closure this winter without “urgent” support from the Government.

In a joint letter to Boris Johnson, Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng, seen by The Telegraph, the UK’s leading hospitality groups said the situation was “no less of a threat” than the drought hitting Britain.

UK Hospitality called for “urgent action” to help with bills, saying the Government should not “allow the stasis of party politics to stifle the urgent delivery of action on energy”.

The sector is calling for a cut to VAT or an energy price cap, such as that in place for customers.

It comes as pubs and restaurants prepare to sign new energy deals as old tariffs expire this autumn. Businesses are facing average increases of 300pc under new deals being offered.

The letter, signed by groups representing tens of thousands of hospitality venues across the country, warned the Prime Minister that “not all businesses will be able to survive this onslaught”.

Ministers have been engaging with hospitality bosses for weeks, although government insiders said the Cabinet has agreed not to make any major announcements or fiscal decisions until a new Conservative leader is selected.

However, Mr Kwarteng was moved to take action to support energy-intensive industries, such as producers of glass, ceramics and paper. On Friday, the Department for Business, Energy & Industrial Strategy said it was considering subsidising bills for the industry to help save the 60,000 jobs in the industry.

There are no signs of similar support for hospitality.

“On Friday, the Government saw fit to declare a drought, in the face of inarguable evidence that weather conditions had caused a threat to the nation. The energy crisis is no less of a threat and deserves similar attention,” the letter from UK Hospitality, the Night Time Industries Association, the British Beer and Pub Association, the British Institute of Innkeeping, and the Music Venue Trust said.

The Department for Business, Energy and Industrial Strategy declined to comment.

A recent survey showing one in four hospitality bosses are considering closing due to the steeper bills. The sector provides 10pc of the UK’s jobs and is responsible for 5pc of GDP.

Alan Morgan, chief executive of Bella Italia owner The Big Table Group, said support had “never been more critical”, with the increase in energy prices so steep “that it moves many reasonable businesses to a position of struggling to make profit at all”. Mr Morgan said he was expecting a “significant amount of closures across the industry”.

Clive Watson, chairman of City Pub Group, said there “has to be a price cap, otherwise pubs will start to close during the winter”.

Many businesses have already drawn up plans to curb their energy use over the winter months, with hotels understood to be looking at shutting spas or mothballing certain floors. Theatre chiefs are considering whether they can change how much lighting or air conditioning they use in venues to try to cut their energy bills.

Ali Carnegie, the managing director at energy broker Total Energy Solutions, said businesses trying to sign new energy deals were "shocked at how much the prices have gone up".

"These are businesses which then have to look at what they can close, and what staff to lose because it's not sustainable."

Over the weekend it emerged that some energy firms are pushing for a bailout fund to cut household bills as energy costs soar across the economy.

ScottishPower and Eon have proposed a scheme to cap bills at current levels for two years and fund the shortfall with wholesale energy prices through billions of pounds worth of loans from banks.

Loans would be repaid over 10 to 15 years, the Sunday Times reported, and funded through either a levy on consumer bills or taxation.

A Energy UK spokesman said: "Given the forecasts for the winter and into next year, the Government must look at all the options on the table for reducing customers' bills.

"Suppliers will continue to do all they can to support customers, but the scale of these bill rises is well beyond the ability of the industry to provide all the help needed - so we need to look at interventions of a scale that will make a real difference."

Such an intervention would not be targeted, which could mean that everybody would benefit, even those who do not need help with their bills.

A HM Treasury spokesperson said the Government had "stood behind the hospitality sector throughout the pandemic with a £400 billion package of economy-wide support" and "went long with that support through a Recovery Loan Scheme for pubs, restaurants and bars to grow and recover from unprecedented disruption."