Pubs and brewers across the UK are at risk of closure within months amid price hikes upwards of 300 percent, industry bosses have warned.
Bosses of six of the UK’s biggest pub and brewing companies have signed an open letter to the Government urging it to act in order to avoid “real and serious irreversible” damage to the sector.
Greene King, JW Lees, Carlsberg Marston’s, Admiral Taverns, Drake & Morgan and St Austell Brewery all sounded the alarm on Tuesday.
And, appearing on GB News on Tuesday, pub owner Maggie Holmes outlined how costs could cripple pubs and consumers alike.
She told Liam Halligan: "We're talking about raising it to £15-a-pint...nobody is going to pay that!"
Maggie Holmes joined GB News' Liam Halligan
GB News
British pubs could really struggle over the next few months
Philip Toscano
Out of control gas prices following Russia's invasion of Ukraine have contributed to rocketing energy bills for operators.
On Friday, regulator Ofgem confirmed that bills for an average UK household would surge by 80 percent in October when the new price cap comes into force.
But businesses operate without a regulated price cap, with some pub owners warning that their bills have quadrupled or are struggling to even find suppliers willing to power their venues when contracts come up for renewal.
William Lees Jones, managing director of the JW Lees pub group, said: “We have publicans who are experiencing 300 percent 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 2,700-strong group Greene King, said one tenant has seen their energy bill jump £33,000 for the year.
He said: “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.
“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 demanded the Government implement an urgent support package that effectively caps the price of energy for businesses.
It 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.”
Pubs could be crippled by rocketing costs
Johnny Green
Customers enjoy a drink in a British pub
Jane Barlow
A Government spokesperson 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 percent 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.”
It comes as a financial analyst warned taxpayers will have to pay back £20billion bill if energy prices are frozen.
Christopher Dembik, Head of Macro Analysis at Saxo Bank, has suggested the Government's lack of support for consumers has contributed to rising inflation levels.
Inflation hit 10.1 percent earlier this month, a 40-year high, with the Bank of England warning this figure could be closer to 13 percent by April next year.
Mr Dembik has compared the French government’s approach with the UK after Emmanuel Macron’s government froze prices at a four percent increase earlier this year.
Mr Dembik, Head of Macro Analysis at Saxo Bank, said: “The United Kingdom is certainly facing as many economic issues as other European countries.
"But on top of that, there are disruptions related to Brexit too. This has accentuated severe inflation by increasing goods and labor shortage. Ultimately, this means much more inflation, which is likely to be double figures for many months.
“Inflation is also probably higher in the UK because the Government’s support to limit the increase in energy prices is lower. In many European countries, the real rate of change in inflation is certainly undervalued because of the cap on energy prices.
"In France, inflation will likely peak close to eight percent year-on-year. This is comparatively low.
"But the Government capped energy prices this year, meaning there will be no increase on gas prices and electricity prices limiting the rise to four percent in 2022. However, this is costly.
"To freeze prices, the Government may have to commit close to £20billion, as the French government have, which will likely be paid back in tax by the consumer in the long-term."
