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Annual energy bills to jump by £4,492 for London pubs and restaurants once Government scheme ends

Establishments in the City of London will be worst affected, analysis from the Liberal Democrats reveals (Getty Images)
Establishments in the City of London will be worst affected, analysis from the Liberal Democrats reveals (Getty Images)

London hospitality businesses are facing the prospect of almost a £4,500 rise in annual energy bills once Government support is slashed, analysis from the Liberal Democrats has found.

Earlier this month the Government confirmed the current rate of support for businesses, introduced in September, will be lowered in April, with a new discount scheme to replace it until March 31 next year.

Industry experts have warned rising costs could lead to many establishments closing their doors for good, with energy bills posing the biggest threat to pubs and breweries.

Buinesses in the City will be the worst affected, with 260 pubs, restaurants and cafes each facing an average bill increase of £5,278 a year.

A total of 130 “micro-businesses” in the area – those with up to nine employees – could face an average bill increase of £3,889 each.

Small businesses with up to 49 workers, of which there are 95 in City of London, could be set back £5,557 yearly.

Medium businesses with up to 249 workers in the area – including 20 licensed restaurants, five unlicensed and 10 pubs or bars – are facing a £9,677 increase.

City of London is closely followed by Westminster, where nearly 1500 businesses will see an average £5,172 increase.

Bills will rise the least in Barking and Dagenham, however local businesses there are still facing an unprecedented rise of £4,028.

UKHospitality CEO Kate Nicholls said: “The Government’s energy support scheme was a lifeline for many hospitality businesses – without it bills would have gone up by more than 400 per cent to date.

“Businesses will be forced to close their doors, jobs will be lost and communities deprived of the hubs that have become a lifeline.

“If we are to avoid that, the industry needs to see action now. Hospitality must be included in the Government’s Energy and Trade Intensive Industries list and we need to see an increase in the business rates relief cap.

“Without such measures, April will indeed prove the cruellest month for hospitality.”

The data comes just days after Bar group Revolution announced it would be shutting venue doors on Mondays and Tuesdays in January and early February due to rocketing energy costs.

Just before Christmas it was revealed almost 400 pubs closed their doors in 2022, citing rocketing energy bills and staffing pressures.

The Government initially capped the cost of business energy, but from April they are replacing that scheme and will instead just pay a small proportion of businesses’ increased costs.

This means many pubs, cafes and restaurants will see a 90 per cent cut in help from the government, the Liberal Democrats claim.

Treasury Spokesperson and MP for Richmond Park Sarah Olney said: “London’s hospitality businesses are facing a cliff edge this year. Our pubs, restaurants and cafes have endured so much already, people will be devastated to see any more harm to our local high streets.

“The Government needs to give businesses not just in the capital, but across, the support they need to endure this energy bill catastrophe.

“Ministers in Westminster must not wait a moment more. Liberal Democrats are calling for them to intervene and think again about this change – if they don’t we could see thousands of businesses, including pubs, restaurants and cafes going bust. This could rip the heart out of our communities.”

The Treasury said it had provided an “unprecedented” £18bn package of support throughout the winter but it was only intended to be temporary.

Under the Energy Bill Relief Scheme, the Government supported businesses and public sector organisations such as schools and hospitals by providing a discount on wholesale gas and electricity prices.

“The government has been clear that current levels of support were time-limited and intended as a bridge to allow businesses to adapt,” the Department for Business, Energy and Industrial Strategy (BEIS) said on its website.

“Wholesale gas prices have now fallen to levels just before Putin’s invasion of Ukraine and have almost halved since the current scheme was announced.

“The Energy Bills Discount Scheme (EBDS) therefore strikes a balance between supporting businesses over the next 12 months and limiting taxpayer’s exposure to volatile energy markets, with a cap set at £5.5 billion based on estimated volumes.”

The EBDS will run for 12 months from April 1 to March 31, 2024.

As per the current scheme, the government will provide a discount on businesses’ gas and electricity unit prices. But establishments will receive a per-unit discount to energy bills, with a maximum discount set at £19.61per MWh for electricity and £6.97 per MWh for gas.

Suppliers will automatically apply reductions to the bills of all eligible non-domestic customers.

Average bill increase for businesses by local authority

Barking & Dagenham: £4,028

Kingston Upon Thames: £4,394

City of London: £5,278

Greenwich: £4,223

Redbridge: £4,270

Harrow: £4,471

Richmond Upon Thames: £4,326

Newham: £4,329

Enfield: £4,144

Lewisham: £4,271

Waltham Forest: £4,112

Hammersmith & Fulham: £4,448

Croydon: £4,220

Haringey: £4,273

Ealing: £4,202

Kensington & Chelsea: £4,810

Wandsworth: £4,474

Barnet: £4,292

Southwark: £4,478

Lambeth: £4,403

Tower Hamlets: £4,497

Hackney: £4,560

Islington: £4,488

Camden: £4,660

Brent: £4,259

Westminster: £5,172

Hillingdon: £4,444

Hounslow: £4,234

Merton: £4,223

Sutton: £4,174

Bromley: £4, 343

Bexley: £4,272

Havering: £4, 123