Manchester bar and restaurant owners are fearing the consequences of a potential U-turn by the government on plans to provide financial support for energy bills. Last year, then PM Liz Truss promised six months of support to business owners, including those in hospitality, as energy bills soared.
But according to a report in The TImes, new Prime Minister Rishi Sunak and chancellor Jeremy Hunt are planning to more than halve the amount that businesses were expecting to receive, though the time frame of the scheme will be extended.
Previously, the scheme was set to provide £40 billion in relief to businesses. But it could now be slashed to under £20 billion, and be spread over 12 months instead of the previously planned six. Hunt had previously said in his autumn statement that aid for businesses would be ‘unsustainable’.
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Speaking to the Manchester Evening News , Jonny Heyes, owner of bars like Common, The Beagle and Nell’s New York Pizza and Bar, said that the industry has been counting on help like this.
“We’ve been relatively fortunate in the timing of some of our energy contracts,” he said. “Some of them run until next spring, but it’s going to be a fair old wallop when all that comes in. But on one of our sites, at Kampus, we’ve been really unlucky, and we’ve been paying much, much higher energy rates for ages.”
Heyes says that his energy bills for the Nell’s Pizza bar at the site near Piccadilly run to £6,000 per month. “Energy prices were already well on their way up even before the crisis in Ukraine. So we’ve been struggling for a while now. When we opened Common, energy bills would cost £1,000 to £1,500 a month. It’s a huge increase.
“We pride ourselves on being a living wage accredited employer, so we pay above the normal rate anyway, and then in context of the cost of living, food inflation, premises costs, all of our consumables, napkins, glassware, cleaning products, all have gone up in the double digit percents.
“And we’re in a fragile marketplace out there, people are much more aware of what they’re spending, so there’s a limit to what we can pass onto the consumer without suppressing demand. We’re on a very sticky wicket here.”
“I’ve got a bit of sympathy with the cost of it,” said David Fox, owner of the Tampopo chain of restaurants. “But watch this space from January to March for businesses that close. I think there’s going to be quite a few insolvencies and administrations happening.
“Margins are being eroded by food inflation, and what’s traditionally the busiest week of the year there were four days of trains strikes and a World Cup final, so that kiboshed a lot of businesses that rely of corporate trade.
“The amount of cash that can generate in the year for some businesses, it can be £50,000 for a large site.”
Fox added that his energy bills have rocketed. “A restaurant space I’m in, I was paying £30,000 a year for electricity four years ago. With government support I’m now paying £90,000 a year. Without government support, I estimate I’ll be paying £120,000 a year.
“This will be happening to restaurants up and down the country. They’ll be paying four times what they were paying a few years ago, and that will be one of the many costs that people will then have to decide ‘have I got a viable business’.”
Ramsbottom restaurant Levanter also tweeted this week: "£545 for our domestic dual fuel energy bill for one month Nov-Dec (includes that very cold snap & £66 govt help) Don’t even ask me about the rise for the biz bills. Untenable. How on earth are people/families on pre-payment coping? JFC." Owners added that business energy bills had rise from 'circa £18k/yr to £55k/yr'.
Speaking about the situation, Manchester’s night time economy advisor to the mayor’s office Sasha Lord tweeted: “If this U-turn’s true, Jeremy Hunt will be responsible for turning the closed sign on 1000s of hospitality businesses across the whole of the UK.”#
The Manchester Evening News has reached out to the Treasury for comment.
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