Hospitality warns of tough winter as government rolls back energy support and tax cuts

The hospitality industry has warned it faces one of the “toughest winters in history” and urged the government to confirm how energy bill support will continue beyond April 2023.

Chancellor Jeremy Hunt today announced a review of long-term energy support for businesses and households.

He also scrapped almost all the tax cuts announced by the government three weeks ago, including a VAT-free shopping scheme and a freeze on alcohol duty rates.

A Treasury spokesperson confirmed the Energy Bill Relief Scheme to help with businesses’ bills will remain in place until April 2023 as planned.

But a similar scheme to cap the unit price of gas and electricity for households has been cut from two years to last just six months until next April.

The government had previously said “vulnerable” industries such as hospitality would receive further support beyond April, but the scale of this is now in doubt.

Hunt said: "Any support for businesses will be targeted to those most effected and the new approach will better incentivise energy efficiency."

The Treasury is to launch a review into how energy bills are supported beyond April 2023 to design a new approach that Hunt said would cost the taxpayer "significantly less than planned".

He added that it was "not responsible to continue exposing public finances to unlimited volatility in international gas prices".

Industry reaction

The hospitality industry has urged the Chancellor to provide more clarity around his long-term plans.

The Campaign for Real Ale (CAMRA) said: “Pubs already under serious pressure now face further uncertainty about what support will be available with gas and electric bills beyond April next year.”

Michael Kill, chief executive of the Night Time Industries Association (NTIA) said: “In less than 40 days in office the prime minister has crashed the economy, placing an insurmountable level of pressure on businesses and people's livelihoods.

“The statement from the new Chancellor, may calm the markets, but has critically compromised thousands of businesses and workers across our sector.”

Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), said the planned freeze in alcohol duty would have delivered a £300m saving to the industry and that scrapping it would be a “huge blow” to brewers and pubs.

She added: “[We] desperately need any relief we can get, to help to keep a lid on spiralling costs and keep the price of pint affordable for pub goers this winter.

“The cost of doing business is completely out of control for pubs and brewers and the failure to act today to reduce pressures on businesses will hit them extremely hard.”

UKHospitality chief executive Kate Nicholls called on the government to continue to work with the industry as part of its review of long-term support.

“One area in dire need of urgent reform is the business rates system, which is currently not fit for purpose and places an unfair burden on hospitality businesses,” said Nicholls.

“This is particularly pressing now, given the additional costs hospitality businesses will now be facing as a result of the freeze on alcohol duty being scrapped.”

The Chancellor will set out further details of his fiscal plan on 31 October.

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