Night time economy's future 'finely balanced' as operators demand support package

By James McAllister

- Last updated on GMT

Night time economy's future 'finely balanced' as operators demand support package for rising cost inflation

Related tags Energy costs Finance Government Night time economy Pub & bar Inflation

More than 6,000 night time economy and hospitality businesses have written to their MPs demanding an emergency financial package to support them through the current cost of living crisis.

The Night Time Industries Association (NTIA), which represents some 1,400 independent bars, clubs and live music venues across the UK, says the future of the late night sector is finely balanced between the delivery of an effective survival package from the new Prime Minister and Government and continued consumer spend and confidence.

Members have written directly to their constituent MPs, urging them to reduce VAT, extend business rates relief and implement an energy cap for small, medium enterprise businesses.

“Over the last three weeks we have seen an escalating public presence of closure notices from pubs, bars, restaurants, venues and clubs across the UK, with over 70% of businesses stating they will be financially compromised within weeks, all of which have stated untenable operating costs as reasons too close,” says Michael Kill, CEO of the NTIA. 

Kill has previously warned that energy bills have increased by more than 300% for over 80% of businesses within the night time economy and is now more expensive than rent and rates combined.

One pub operator in Scotland has seen energy costs rise from £31,000 in 2021 to £86,000 in early 2022, overshadowing the combined cost of rent and rates at £76,000.

The energy crisis is having a profound impact on the viability of many businesses in the hospitality sector with some operators already announcing the closure of sites due to the impact of rising bills.

Last week it was reported that BrewDog would close six of its bars​, with co-founder James Watt hitting out at what he described as a 'clueless Government' for failing to support the hospitality through the crisis.

It's not just energy costs hitting businesses hard either. The NTIA notes that one of its members, a 400-capacity nightclub in the South East, has seen the staff costs increase from 26% to 32% of turnover and its main beer supplier increase costs by 25%. Meanwhilem its energy tariff has tripled within the last few months.

Other businesses report a steep rise of more than 80% to their annual insurance premium.

'Covid-style support' needed for businesses

Energy UK, a lobby group for the energy industry, has called on the UK Government to introduce Covid-style support schemes for help businesses cope with the rising cost of gas and electricity.

As reported by the Financial Times​, the group, which represents around 100 energy suppliers and retailers including Shell, Centrica and Ovo, has written to Chancellor Nadhim Zahawi saying it is concerned the ten-fold rise in wholesale gas prices since the start of last year would impact the viability of businesses, as well as local authorities and hospitals.

It recommends the Government introduce grants similar to those introduced during the pandemic, which saw £45bn paid through local authorities, a Treasury-backed loan scheme and exemptions for business rates.

The group also called for VAT to be removed from energy bills.

“The Government helped support businesses through the pandemic and sadly this current crisis is of a similar magnitude for many of them — threatening closures, job cuts and higher consumer price,” says Dan Alchin, Energy UK’s director of regulation.

“Having worked so hard to get so many of these customers through one crisis, we need to do everything possible to avoid losing them to this one.”

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