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Cautious optimism for energy freeze as trade braces for bitter winter

Published:  09 September, 2022

The six-month energy cap unveiled by the Prime Minister yesterday has been met with a smattering of optimism among businesses. Though predictably, the resounding consensus from many corners of the trade is that the measure does not nearly go far enough in limiting the impact of exorbitant energy costs.

Considering that the average energy price increases for the hospitality sector is currently at 238%, any freeze to energy bills is welcome at this stage.

However, many are now calling on the government to provide support and clarity on how businesses will weather the ongoing storm of inflation and soaring costs.

“We very much welcome the Prime Minister’s recognition of the specific struggles the hospitality industry faces and the promise of further support, alongside her positive plan to help consumers and businesses tackle rising energy bills,” Kate Nicholls, CEO of UKHospitality, said.

“While the welcome energy price freeze will ease the pressure on our customers and colleagues, high bills will still constrain spending in the sector and operators themselves will still have to fund energy bills and other rising costs. For many hospitality businesses, this will prove too much to bear, and hundreds of community assets will be shut, and jobs lost unless additional support is brisk and bold.”

She is now calling on the government to deliver swift additional actions for “long-term recovery” in this autumn’s budget. This includes the hope of a significant cash injection, such as cutting VAT for the sector to 10% and providing business rate relief.

The SLTA (Scottish Licensed Trade Association) has also warned that hospitality businesses will continue to struggle, despite the cap.

“Sadly, the damage is already done,” SLTA managing director Colin Wilkinson said. “[Yesterday’s] announcement has not gone into enough detail on what ‘equivalent support’ [for businesses and households] will mean and does not help businesses already planning to close or reduce their opening hours over the winter period.

“This should have been a priority for Westminster months ago when experts were ringing alarm bells and warning of the juggernaut that was on its way…It’s using plaster to fix a broken leg.”

As part of yesterday’s unveiling of the two-year Energy Price Guarantee for householders, Prime Minister Liz Truss introduced a cap for energy bills at £2,500 a year.

She also promised “equivalent support” for six months for businesses, although exact details have yet to be announced.

Many share the view of Jason Birks, the national president of the Federation of Independent Retailers (the Fed), who said that news of support for businesses “should give struggling retailers some comfort and relief”.

However, he too is calling for more detail and support, as quickly as possible – and as the weather swiftly drops.

“Six months is a starting point, but the Fed and its members need longer-term assurances that support will be ongoing,” he said.