The rate at which pubs are closing, being demolished or redeveloped has jumped by 60% in the first three months of 2023, with more expected to follow as government energy support is slashed.
Analysis of government figures by Altus Group reveals that 153 pubs closed in England & Wales between January and March 2023 due to “decimating” energy bills.
Altus Group's figures show an average of 51 pubs – nearly two a day – were forced to close each month between January and March. This compares to an average of 32 pubs a month closing throughout 2022.
Speaking to Supply Management, a spokesperson from the British Beer and Pub Association (BBPA) said: “Pub closures are only set to get worse,” now that the government's Energy Bill Relief Scheme ended.
Last month, the cap on the unit price of gas and electricity ended, and it has now been replaced by a new scheme which will see support cut by 85%.
BBPA chief executive, Emma McClarkin, said: “Energy bills are decimating our sector, with extortionate costs wiping out profits and closing pubs at a faster rate than the pandemic.”
She added: “Pubs that were profitable and thriving before the energy crisis are being left with no option but to shut up shop. We have been raising the alarm for months that energy costs are posing an existential threat to pubs across the country, and these figures are evidence of that.”
Under the government’s new energy bill support scheme, which began this month, businesses receive a discount of up to £6.97 per megawatt-hour (MWh) on their gas bill and a discount of £19.61 per MWh on electricity up until March 2024.
But the discount will only apply to energy prices above a threshold level of £107 per MWh for gas and £302 per MWh for electricity, meaning if energy prices fall, firms may no longer be eligible for support.
McClarkin has called on the government to allow pubs to renegotiate energy contracts that were agreed during the period of higher wholesale energy prices seen last year.
“Make no mistake, the longer this goes on the more pubs will be lost forever in communities across the country, something must be done immediately to save them,” she said.
Further research by the British Chambers of Commerce (BCC) said almost half (47%) of firms said paying bills will be difficult following the cut to energy support.
The BCC’s director of policy and public affairs, Alex Veitch, said: “We have been signalling for months that many businesses will struggle to afford their energy bills when financial assistance reduces by 85%, with many receiving a fraction of their original support.”
Veitch added: “These changes will have a significant impact, but government is yet to offer any meaningful support to offset the challenges currently facing so many UK businesses.”
Federation of Small Businesses (FSB) policy chair, Tina McKenzie, said: “Tens of thousands of small firms are now at an existential risk” following downscaled support. The cliff-edge we’ve been warning about for months is sadly here. Government energy support will largely downscale to a scheme that offers almost no help.”
She added: “From cafés and pubs to salons and convenience stores, small firms that fixed their energy contracts last year will see their bills rise by three or even four-fold as prices revert back to high prices and to pre-Energy Bill Relief Scheme level.”
The FSB recently found 28% of small firms said rising costs could force them to downsize, close or restructure their businesses – equating to 370,000 SMEs.
McKenzie said: “Added cost pressures can’t be easily absorbed by small firms which have little to no cash reserves, while customers can’t afford to have these price increases passed on in full.”
She continued: "But there is still time to cut the pain and pull these firms back from the cliff edge. Allowing small firms to renegotiate and ‘blend and extend’ their energy contracts will enable them to come out from the high fixed price with their energy suppliers, and move onto a new fixed term contract that reflects the lower prices we see at the moment.”
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