Hospitality welcomes energy bill cap but warns more support is needed

21 September 2022 by
Hospitality welcomes energy bill cap but warns more support is needed

The hospitality industry has welcomed the government's announcement of a cap on business energy bills but warned more support will be needed to help operators survive the winter.

The new Energy Bill Relief Scheme will provide a discount to businesses on their bills for six months from 1 October.

Additional support for "vulnerable" industries such as hospitality will be introduced after the initial six months.

But several trade bodies have called on the Chancellor to set out further measures such as a cut in VAT in the mini-Budget this Friday (23 September).

'More help is required'

The Scottish Licensed Trade Association (SLTA) said there was "no way near enough" support and warned some hospitality venues could still face energy bills that were 200%-300% higher than normal.

An SLTA spokesperson said: "Nothing in the plan tackles the problem of large deposits and bonds, particularly for the SME independent sector, nor restricts the additional margins made by energy suppliers.

"It is clear to us that more help is required and urgently if we are to stave off business closures in the coming months."

The Night Time Industries Association (NTIA) warned the price cap may not be enough in "isolation" to ensure businesses had the financial headroom to survive the winter.

Operators who entered fixed contracts before 1 April, when energy prices were still high, will not be eligible for support and many have incurred debts after months exposed to uncapped pricing, the NTIA said.

The NTIA warned energy suppliers could still impose mark-ups on network charges and operating costs, which are uncapped, on businesses.

"The net result of this could be a position where small businesses are still being asked to pay unaffordable energy bills of several hundred percent more than in previous years, which is clearly not sustainable," the NTIA said.

"We will now have to wait for the announcement on Friday from the Chancellor on further support, however, we must note that the measures being discussed to date such as corporation tax relief will simply not be sufficient, given only one in four hospitality businesses would currently benefit from such measures, as three out of four are not trading profitably."

The British Beer and Pub Association (BBPA) also called on the Chancellor to introduce more targeted support in the mini-Budget on Friday.

"Whilst this announcement has helped businesses to breathe an initial sigh of relief as they head into this critical period, more support is needed to tackle the cost of doing business and we need a plan beyond the next six months," said BBPA chief executive Emma McClarkin.

"On Friday, the Chancellor must take steps to address the cost of doing business, by reducing the tax burden on our sector, allowing pubs and brewers the chance to not only survive this winter, but remain at the heart of local economies and their communities for many years to come."

UKHospitality said the price cap would protect a "huge number" of jobs and that it would continue to work with government to ensure there was no "cliff edge" when support ended.

Image: Roman Chazov / Shutterstock

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