Hospitality sector urges energy bill relief as pressures mount

Trade association UKHospitality has once again written to the government and regulators, calling for urgent support to help businesses manage the inflationary impact of energy costs linked to the escalating conflict in the Middle East.

The request comes as hospitality businesses prepare for a wave of increased expenses in April, including higher wages and employer National Insurance contributions, on top of ongoing business rates pressure.

Industry pushes for financial relief

UKHospitality chief executive Allen Simpson has reportedly written to Ed Miliband calling for a broad package of support to protect the sector from rising energy bills.

According to MCA Insight, Simpson argued that the most immediate forms of relief would be through changes to VAT and business rates.

“The two clearest modes of support are on VAT and business rates,” Simpson wrote. “A reduction in the sector’s VAT rate would be quick to implement and easy to administer, given the experience during the pandemic.”

He also suggested that local authorities could introduce business rates relief similar to the measures used during the previous energy crisis, when hospitality businesses received up to 75% relief on their bills.

The subject of business rates has been one of contention within the hospitality industry, with industry leaders regularly speaking out about the impact business increases are having on their businesses. The Autumn Budget fell short of delivering meaningful reform to the business rates system. 

While there was an introduction of a lower multiplier, increases in rateable value meant that many properties would not qualify for the lower rates.

And, while there has been targeted relief for some hospitality businesses (pubs, for instance, are going to be able to take advantage of an additional 15% relief for the 2026/27 financial year), few believe the government has gone far enough. 

Government support announced for households

The calls for support came just before the government unveiled new support measures for households affected by rising energy costs.

Yesterday, Keir Starmer announced £53 million in financial support for vulnerable households that rely on heating oil, following sharp increases in oil prices linked to the ongoing US-Israeli war with Iran.

During the last energy crisis, the government rolled out financial relief measures for businesses in the form of the Energy Bill Relief Scheme (EBRS) from 2022 to 2023, followed by the Energy Bills Discount Scheme (EBDS) from 2023 to 2024.

However, it’s unclear at present whether there are similar plans to extend support to non-domestic energy customers this time around. 

Rising costs expected to hit hospitality next month

In addition to rising energy bills, as of next month, businesses will also face higher employer contributions following increases to National Insurance, alongside a rise in the National Living and Minimum Wage.

For a sector largely made up of small businesses with tight margins that rely on lower-paid staff, the cumulative impact of wage increases, tax changes and rising energy costs could be significant. 

It’s really a matter of survival. With over 3,000 hospitality businesses calling it quits in 2025, insolvency is sadly an all-too-familiar threat facing the industry, which is why leaders are pushing for urgent relief now.

What small hospitality businesses should do now

While governmental support measures remain uncertain, hospitality operators may have a better chance of securing help at the local council level.

In the meantime, independent businesses should continue to manage costs closely while sitting tight for potential relief schemes to be announced. 

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Planet of the Grapes founder Matt Harris has over 25 years of experience in hospitality. Read his bi-monthly column for Startups now.

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