‘Serious concerns’ about £5.5bn energy support scheme

Hospitality trade bodies have voiced ‘very serious concerns’ about the UK government’s £5.5 billion (US$6.7bn) energy scheme to support businesses.

The current cap on wholesale unit costs of electricity and gas for firms will expire at the end of March. It will be replaced with a new scheme that offers a discount on wholesale prices.

The Scottish Licensed Trade Association (SLTA) has questioned how effective this initiative would be, particularly in the wake of the Covid-19 pandemic and a “bitterly disappointing December” due to multiple factors including train strikes.

Colin Wilkinson, SLTA managing director, said: “To hear that the current energy scheme is to be replaced with one that offers a discount on wholesale prices rather than a fixed cap price means that businesses will receive a vastly reduced level of support – understandably, we have very serious concerns about the impact this will have on the hospitality sector.

“Obviously we are grateful for any government support but this new Energy Bills Discount Scheme does not, in our view, offer much hope for vulnerable sectors like hospitality, when you consider that energy costs now account for around 8%-10% of turnover for an average pub or bar. Energy is the second-highest cost for hospitality venues.”

Wilkinson also noted how small businesses, in particular, would not benefit much from the new scheme.

He continued: “James Cartlidge, the Exchequer secretary to the Treasury, said that discount would be the equivalent to a £2,300 (US$2,790) saving for a pub and of course every little bit helps. But it’s not nearly enough.

“We said before Christmas that we know of many businesses set to close permanently amid the cost-of-living crisis and other ongoing pressures and there is also that other elephant in the room – the fact that we urgently need meaningful intervention on business rates.”

‘Unjustifiable demands’ from energy companies

UK Hospitality has analysed the impact of the scheme on the hospitality sector, and said the “lower level” of support would add an extra £4.5bn (US$5.5nbn) to bills compared with the previous scheme.

“This will simply be unsustainable for many,” said Kate Nicholls, chief executive of UK Hospitality. “One measure in particular that would make a significant difference would be increasing business rates relief cap.

“Now we have some clarity of the future of energy support, we must see a concerted change in behaviour by energy suppliers, who have been unfairly treating businesses with outlandish quotes and unjustifiable demands for enormous deposits or pre-payments. Government must act swiftly if this is not forthcoming.”

Industry charity The Drinks Trust has created a grant scheme for hospitality workers struggling to pay energy bills.