Pubs and brewers are at risk of closure amid price increases of more than 300 per cent, industry bosses of six of the country’s biggest pub and brewing companies have warned in an open letter to the government.
Greene King, JW Lees, Carlsberg Marston’s, Admiral Taverns, Drake & Morgan and St Austell Brewery urged the government to act in order to avoid “real and serious irreversible” damage to the sector which operates without a regulated price cap.
The bosses want the government to extend the energy price cap to businesses. Ofgem, the regulator, announced on Friday that the price cap for the average household would rise from £1,971 to £3,549 a year on October 1, with analysts forecasting further rises to above £5,000 in January and as much as £7,000 in April.
Energy bills rocketed after western sanctions imposed on Russia for its invasion of Ukraine pushed gas prices to highs. William Lees Jones, managing director of the JW Lees pub group, said: “We have publicans who are experiencing 300 per cent-plus increases in energy costs and some energy companies are refusing to even quote for supply.
“In some instances tenants are giving us notice since their businesses do not stack up with energy at these costs. These are not just pubs but people’s homes and the hearts of the communities that they sit in. Government needs to extend the energy cap to business as well as households.”
Nick Mackenzie, chief executive officer of Greene King, the brewer with 2,700 pubs, restaurants and hotels, said one tenant had seen their energy bill jump by £33,000 for the year.
“While the government has introduced measures to help households cope with this spike in prices, businesses are having to face this alone, and it is only going to get worse come the autumn,” he said. “Without immediate government intervention to support the sector, we could face the prospect of pubs being unable to pay their bills, jobs being lost and beloved locals across the country forced to close their doors, meaning all the good work done to keep pubs open during the pandemic could be wasted.”
The bosses, who sit on the board of British Beer and Pub Association (BBPA), have asked the government to implement an urgent support package that in effect caps the price of energy for businesses.
The plea comes as knock-on effects from rising energy bills are also impacting the sector, with CF Fertilisers, one of the UK’s biggest CO2 producers, revealing it will halt production at its remaining UK ammonia site due to rocketing costs. Brewers have warned that they could face disruption if there is a shortfall in supply of CO2, which is used in the production of some beer.
Emma McClarkin, chief executive of the BBPA, said: “This rise in energy costs will cause more damage to our industry than the pandemic did if nothing is done in the next few weeks. Consumers will now be thinking even more carefully about where they spend their money. There are pubs that weathered the storm of the past two years that now face closure because of rocketing energy bills for both them and their customers.”
The government said: “No government can control the global factors pushing up the price of energy and other business costs but we will continue to support the hospitality sector in navigating the months ahead. That includes providing a 50 per cent business rates relief for businesses across the UK, freezing alcohol duty rates on beer, cider, wine and spirits and reducing employer national insurance. This is in addition to the billions in grants and loans offered throughout the pandemic.”