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UK pubs threatened by 'surprising' rise in energy bills

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LONDON — Lindsay Armstrong’s dilemma worsens by the day, and Britain’s energy crisis looms over her pub.

By early October she will have to renew her electricity contract, but the only price she can get is £118,000 ($135,000) a year.

“Prices go up every day” Armstrong, owner of Champs Sports Bar and Grill in the small town of Washington, North East England, said: She certainly didn’t put in much time, but she says she didn’t expect prices to rise this much, and the shortest contract she was offered was her 3 years.

She is reluctant to sign a fixed-term contract at the current price.

“The longer you wait, the harder it will be to make a decision, but you can’t really sign a contract for such a period,” she said.

Mr. Armstrong is risking waiting in the hope that the new government will intervene by the time a new contract is signed.

Across the UK, panic is growing about the cost of energy. Households face an 80% increase in energy bills from next month. The government is providing some help with residential gas and electricity bills, and it’s unclear what form that will take, but the country is waiting for a new prime minister to be formally appointed on Tuesday. increase.

Less protection for companies. Industry groups have warned that a wave of closures could come over the winter if small but energy-intensive businesses, especially pubs and restaurants, are not helped by skyrocketing bills. .

Renowned brewery and pub chain BrewDog has announced the closure of six locations across the country, just two weeks after opening its largest bar ever in London.

“The reality of the hospitality industry is starting to get tougher,” BrewDog co-founder James Watt wrote in a LinkedIn post announcing the closure on Thursday. The chain will maintain around 70 stores across the UK.

Last week, the chief executives of six major pub chains and breweries and the chairman of the British Beer and Pub Association called on the government to intervene “quickly and substantively.” Without it, “it is no surprise that we will witness huge numbers of pubs shutting down altogether and individuals losing their jobs during the cost of living crisis,” they wrote.

The energy crisis is sweeping the economy while alarm bells are ringing in pubs. The Small Business Federation warns of the impact on everything from fish and chip shops to laundromats. The group estimates that electricity prices for small businesses have risen nearly 350% since February 2021, and gas prices have risen more than 400%.

Some businesses have already closed, such as small radio stations, cafes and shops. Other institutions, including food banks and hospices, have expressed serious concerns about how they will finance their rising bills.

There is no way for many of these companies to fully absorb the costs or raise their prices to cover the costs. The Bank of England predicts the UK economy will enter a prolonged recession this year as household incomes experience their worst squeeze in generations. Inflation is rising at its fastest pace in 40 years, rising 10.1% year-on-year in July, and wage growth has not kept pace. The situation led to dozens of strikes across the country.

Sean Hughes says what help the new government will provide before the energy deal at his gastropub Dylan at The King’s Arms in St Albans, just north of London, is renewed in November. Current estimates are “amazing”, he said, with gas rising from around £6,000 to over £52,000 a year and electricity rising around £49,000. He said the crisis could be worse than the coronavirus pandemic for the hospitality industry battling rising costs.

Rising utility bills are even making companies with contract renewals imminent nervous.

Gil Lee Ford, one of the richest enclaves in the North West of England, is worried. She owns old Admiral Rodney in the village of Prestbury in a part of Cheshire dotted with multi-million pound homes. It’s the sort of place Premier League footballers call home. Back in May, Leigh-Ford said she didn’t use an energy broker — a service that helps companies find the best prices — after her previous broker demanded a deposit of £7,000 for a new contract. I had to update my electricity and gas bills to.

She is currently on a two-year contract, but worries that her energy supplier will find a way to terminate the contract. “I don’t trust energy companies,” Lee Ford said. “I think they can raise the price anytime.”

Mark Holden, co-owner of the Inn Cornwall, a pub company located more than 200 miles away, put his savings to work in 2010. The company operates his three pubs in Cornwall and employs about 100 people. Holden said he won’t be updating electricity rates until March, but that’s little comfort. Late last year, his gas supplier went bankrupt, so he had to find a new supplier at a much higher price.

“Nothing is guaranteed,” he said.

Holden has already installed solar panels in one of his pubs to cut costs, but the company still consumes a lot of energy in its large old building, which runs long hours from breakfast to dinner.

Energy prices are still very high in March and without government intervention, “we will probably start working on an exit strategy coming out of the industry,” he said. cover the cost.

In Washington, Champs is a franchise business modeled after an American sports bar, with burgers and wings on the menu and TVs on the walls. Armstrong said he could set his own prices, but that the extra energy would require “astronomical” price increases to cover his costs, making most menu items double his prices. The pub would have to earn him £6,000 more each week than he currently earns.

The most popular idea among businesses seeking relief is capping energy bills, as residential customers have. Another proposal is to reduce the value-added tax, a form of consumption tax, reportedly being considered by Foreign Minister Liz Truss. Truss is also expected to be the next prime minister after a Conservative poll showed him well ahead of his rival, former prime minister Rishi Sunak.

Armstrong said he didn’t expect the sales tax savings to be passed on to customers because he would need the money to pay for the bar’s utilities.

Armstrong is now considering shortening hours, limiting food service hours, closing some pubs and reducing staff working hours. However, her employees are also facing steep price increases in her household, some of them new parents, so she is reluctant to reduce her working hours.

But even with all these changes, Armstrong said, it would not be able to cover the expected increase in electricity bills.

Since the lockdown due to the pandemic, “we’ve been able to open up. We’ve had a really good year. And to have this is just soul-destroying,” she said. Told. “It completely destroys the soul.”