When the Faulkland Inn first opened its doors, George II was on the throne and Britain was at war with Spain. Since then, the 280-year-old coaching inn has weathered a dozen recessions, two world wars and the Covid pandemic. Now soaring energy bills have proved a battle too far. The village pub near Bath is facing closure with the loss of eight jobs because it can no longer afford to keep the lights on.
“Our gas and energy bills have doubled since April and we’re facing annual fuel costs of at least £20,000, which will wipe out our profits,” says the landlord, Andy Machen. “Until April we needed to make £2,500 over the four days a week we are open in order to break even; now we’d need to make £4,000 and are paying staff out of our personal savings.”
The pub is one of hundreds of hospitality venues facing the risk of extinction across the UK because of the soaring cost of fuel. The energy price cap imposed by the regulator for Great Britain, Ofgem, to protect consumers does not apply to businesses who pay, on average, double the capped rate for gas and electricity and, while householders are to receive government payments to help pay for energy bills, there is no such support for small companies.
At the start of the year we were on track to recover, with plans to extend our guest accommodation
Landlord Andy Machen
Machen, who bought the inn with his wife three years ago, says that with the focus on household fuel costs, family-run firms have been forgotten. “The government gave us thousands of pounds to see us through the pandemic and at the start of the year we were on track to recover, with plans to extend our guest accommodation,” he says. ‘Then, out of nowhere, the bills doubled and there was no time to plan or budget for it. Our eight staff will receive government handouts to help pay their own energy bills but they will no longer have a job because we can’t pay ours.”
Their daughter Danielle Frankcom, who is the pub’s chef and helps with the general running, says they will keep going as long as possible. “Everything is pretty horrendous at the moment,” she says. “We were doing fine up until two months ago and now it feels like everything is going to pot. Our locals have been fantastic and we’ve been busy every evening, but sometimes with bills it’s just not viable, is it?”
One year after the government launched its hospitality recovery strategy, which envisaged pubs and restaurants helping to reinvigorate local economies, only one in three establishments are reporting a profit, according to a recent survey by the British Beer and Pub Association. Energy bill increases of up to 150% are the main reason for shrinking turnover and almost half have had to cut opening hours to avoid closure.
Last month the number of pubs in England and Wales had fallen to the lowest level on record, with 7,000 having closed since 2012. There are fears that the impact of the energy crisis will be worse than Covid, with some venues predicting extra costs of up to £60,000 by the end of the year.
We urgently need an energy price cap for small businesses before extortionate energy bills cripple pubs
BBPA’s Emma McClarkin
“This is only just the beginning,” says Emma McClarkin, the chief executive of the BBPA. “Bills will only continue to rise as we head into winter and is putting pubs in real jeopardy. We urgently need an energy price cap for small businesses before extortionate energy bills cripple pubs and we lose them for ever.”
The Machens have already reduced their opening hours to four days a week to mitigate costs. They plan to shut for good at the end of the summer once the bookings for their three guest rooms have been fulfilled. The closure will leave the small village almost five miles from the nearest pub. The 400-year-old pub in the neighbouring village of Buckland Dinham closed down in March. “A pub is a not just a business – it’s a way of life,” Machen says. “For some of our regulars we are their social life.”
Robinsons Brewery, which owns 260 pubs and hotels in the north-west of England, says that tenant landlords whose fixed-term energy contracts are ending are seeing their profits wiped out by the jump in costs. “Utilities bills have overtaken wages for the first time,” says Ben Robinson, the operations director of the 181-year-old brewery. “One of our small pubs saw its price per unit go from 13.5p per unit to 55p overnight and the standing charge double to £1 a day, which adds £18,000 to the annual fuel bill. Some large pubs which make a profit of about £45,000 a year, are seeing their bills go from £25,000 to £80,000.”
Robinson predicts that the impact of soaring bills will be worse than Covid because the hospitality was cushioned through lockdowns by government funding. “Now we’re getting no meaningful help at all,” he says. “We urgently need the government to give business the same protection as individuals and cap energy prices.”
The Department for Business, Energy and Industrial Strategy told the Guardian that the price cap was applied to households after energy suppliers were found to be making excessive profits from customers who failed to switch but businesses were omitted from the protection because there was no evidence that they were similarly exploited. It said it was supporting small businesses to improve their energy efficiency.
“No national government can control the global factors pushing up the price of energy and other business costs but we will continue to support the hospitality sector in navigating the months ahead,” a spokesperson said.
“That includes providing a 50% business rates relief for pubs and businesses across the UK, freezing alcohol duty rates on beer, cider, wine and spirits and reducing employer national insurance. This is in addition to the billions in grants and loans offered throughout the pandemic.”
Machen says that the unpredictability of energy bills makes it impossible to plan ahead and, with profits still depleted by Covid, he and his wife fear racking up large debts if they continue trading. “We own the freehold, so we won’t lose our home, and I have another job that brings in an income, but it will be devastating for the staff who are close-knit and love their work,” he says. “This pub was my wife’s great dream, her Shangri-la, and it’s been the heart of the community for 300 years but now I can’t see a light at the end of the tunnel.”