Rising electricity signs death warrant for thousands of British pubs

Thousands of British pubs will “close” because of rising electricity bills if they do not receive support from the state. The UK government has warned that massive job losses are inevitable in the absence of assistance, and the catering sector is still grappling with the effects of the coronavirus pandemic.

Thousands of UK pubs could close without urgent government support to cushion the blow from soaring electricity bills, putting jobs at risk in a sector still struggling to recover from the Covid pandemic, beer industry officials have said.

According to The Guardian, executives from the companies that own nearly half of the UK’s 47,000 pubs have said tenants have already given notice because they can’t handle electricity bills that are set to rise more than fivefold in some cases.

Many firms were doomed to death and oblivion without state intervention.

A letter from the British Beer and Pub Association to the government and Conservative leadership candidates Liz Truss and Rishi Sunak said massive job losses are inevitable in the absence of help from an industry that employs 940,000 people.

Nick McKenzie, chief executive of the 3,100-strong pub chain Greene King, said the blow to energy bills comes just as the sector is trying to overcome the devastating effects of the COVID-19 lockdowns, which have hit the hospitality sector particularly hard. .

“While the government has taken steps to help households cope with this price spike, businesses are having to face it alone and things will only get worse in the fall,” Mackenzie said. “Without immediate government intervention to support the sector, we could face the prospect of pubs not being able to pay their bills, jobs being lost, and locally-loved establishments across the country being forced to close their doors, meaning all the good work The work done to keep pubs open during the pandemic could be wasted.”

St Austell Brewery colleague Kevin Georgell said thousands of pubs could be forced to cancel their last orders for good.

Chris Jowsey, chief executive of Admiral Taverns, said the implications would be dire: “One of our licensees reluctantly gave notice to leave his pub after the cost of electricity increased by 450%, making profitable trading impossible. 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 typically buy energy from suppliers under long-term, fixed-price contracts.

Some reported that they were told that their supplier was no longer willing to offer a flat-rate contract for hospitality businesses because they feared the client would go broke. This leaves them at “implied” non-contract rates, which can skyrocket in line with wholesale markets.

Other pubs said their supplier told them to put up a £10,000 deposit if they wanted a contract, or to get quotes indicating a sixfold jump in their energy costs.

The problem is exacerbated by the outpacing inflation of 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 until November 2023 with £5,800 checking accounts, until his supplier went bust and was forced into an emergency £24,000 contract with a new supplier.

By that time, he had invested in gas cookers, while otherwise he would have opted for induction cookers. “I think this will be the biggest challenge this industry has faced, including the 2008-2010 financial crisis and Covid,” he said. “As an industry, we are approaching the edge of a cliff in April, especially if business rates return to 100% without support. This will be the death of the industry.”