Energy costs pose an “existential threat” to pubs across the country

The UK pub sector is being hammered by soaring energy bills, with more than 150 pubs disappearing from communities in England and Wales over the first three months of 2023, according to new data from commercial real estate intelligence firm Altus Group. 

The rate of pubs being demolished or redeveloped for other purposes increased by almost 60% at the start of the year as a result. Last year, 386 pubs permanently closed their doors.

The sector is also under pressure from rising food prices and weakened consumer demand, but the British Beer and Pub (BBPA) Association has warned that the average energy bill for a pub would rise by £18,400 a year from this month as the Energy Bill Relief Scheme comes to an end. Its termination is set to wipe out the benefit seen from reductions to property taxes, according to Altus Group. 

Alex Probyn, president of property tax at Altus, said that while pubs have seen their values for the business rates tax fall 17% overall, “that simply won’t compensate for the energy support being lost, making plots even more attractive for alternative investment”.

Wholesale energy prices are, on average, lower now than they were in March 2022, but these price drops are not benefitting customers trapped in fixed contracts.

“Energy bills are decimating our sector, with extortionate costs wiping out profits and closing pubs at a faster rate than the pandemic,” said Emma McClarkin, chief executive of the BBPA.

“Pubs that were profitable and thriving before the energy crisis are being left with no option but to shut up shop. We have been raising the alarm for months that energy costs are posing an existential threat to pubs across the country and these figures are evidence of that.

“It is essential that the government intervenes to ensure energy suppliers are offering the option of renegotiation to pubs locked into unmanageably high energy contracts. Make no mistake, the longer this goes on, the more pubs will be lost forever in communities across the country. Something must be done immediately to save them.”

As of March 31, the total count of pubs in England and Wales, including those being offered for rent and those that are unoccupied, decreased to 39,634. The rate of closures has accelerated to at least 51 pubs per month, which is a significant surge compared to the 32 pubs that shut down every month in 2022.