Energy crisis: the reality for local pubs

STORY: Nestled in a leafy London suburb, the Red Lion and Sun pub fears financial ruin this winter as its energy costs surge.

Just as it had been hoping to recover from the global health crisis.

The pub's annual energy bill is on course to rise from $18,500 to $76,000 a year.

And it’s not the only one.

Small businesses negotiating new energy contracts with suppliers face a four- or five-fold increase, compared with prices negotiated two years ago, according to energy analysts Cornwall Insight.

James Cuthbertson, a director of The Frisco Group, which manages the pub, said 70% of publicans aren’t going to make it through the winter – unless something is done about these prices.

“The government has to react by introducing a price cap on businesses, on business energy… Talking about putting VAT down to 5% is, it's a distraction. Deal with the energy, that's the biggest thing we face right now. We'll deal with the rest. But sort energy, sort it now and bring in a price cap and make it fair and make it so that we can actually continue to run our business."

The spike in costs for businesses is greater than that faced by households, whose tariffs are predicted to rise three-fold over this period.

British gas prices have more than doubled since Russia invaded Ukraine in February - and are 15 times higher than two years ago.

Across Britain, pubs must make difficult choices such as raising prices or reducing hours, Cuthbertson said.

“We've discussed ideas like closing for winter…Here we've just done a deal we can just about make work. But things are changing every day and one site’s up for renewal at the end of November. So if that's not something sensible, what are we talking about? Redundancies? Are we talking about just closing, giving the keys back? …Unless there is intervention now, everything is on the table."

Consumer price inflation hit a 40-year high of 10.1% in July in the UK and is set to rise further.

This will also limit the amount of money Brits will have to spend on going to the pub.