UKHospitality: Action on energy

Chief executive Kate Nicholls on how UKHospitality is continuing to help tackle rising energy costts...

‘Energy’ used to be a word imbued with such positivity – but whenever I see it these days I’m filled with dread, especially when it’s married to that equally doom-laden ‘costs’. I’m sure many contract caterers feel the same.

But tackle energy costs we must, and UKHospitality continues to work with government to address what is the root cause of inflation. Whether you operate from a premises that pays the bills or not, these increased costs will be passed on somewhere down the line. Yes, the headline rate may have come down, but food inflation remains frustratingly high and food production costs are feeling the energy price pinch, too.

What has the potential to make matters worse is the recent ending of the Ukraine grain deal. The agreement between Russia and Ukraine to allow grain and oilseeds to safely leave Ukraine was essential to provide some stability to global food prices.

With this ending, we fervently hope it won’t lead to a spike in prices again because, as we witnessed last year, volatility in the supply chain can hit the prices UK hospitality businesses have to pay. And with food input inflation remaining above 20%, as it has done for months, any further increases would undoubtedly compound the pressures facing contract caterers.

As we’ve said previously, the key to tackling inflation is to get the root causes of price increases for businesses under control. That’s why we’ve been liaising closely with energy regulator Ofgem; which, at the time of writing, is about to publish its review into non-residential contracts, the findings of which will hopefully provide some relief to contract caterers weighed down with high bills. However, their recommendations will need to be acted upon by the government.

And to keep those high energy costs at the top of the government’s agenda, I’ve been working with Robin Millar, MP for Aberconwy in North Wales, to launch a campaign to secure common sense energy contracts for businesses.

Robin said at the launch that not only were businesses in his constituency struggling with sky-high energy costs, but they were also having quotes from providers withdrawn or, in some cases, simply not offered. Others described being punished with punitive variable rate increases if they didn’t sign-up to fixed term deals. “This,” he said, “is unacceptable, anti-competitive and the characteristics of a dysfunctional market.”

He’s quite right, and I’d add that the hospitality industry is very much the canary in the coalmine when it comes to the behaviour of some energy suppliers, who we’ve seen pursuing unfair tactics with no good reason. These include demanding significant security deposits and hiking up standing charges, while their refusal to offer contracts to hospitality businesses has been highlighted by Ofgem as a particular cause for concern.

This campaign with MPs will continue into the summer, as parliament’s summer recess begins. Even though parliament isn’t sitting, recess provides hospitality businesses with the opportunity to invite their local MP along to their premises, so that they can learn at source about the issues that our sector is facing – whether they be high energy costs, unfair business rates or staffing problems.

To make this easy, we’ve produced a template letter on our website for you to complete and send to your MP. Not only will you be able to raise your concerns, but beginning to develop a closer relationship with your local MP can help you raise matters more easily in the future and ensure that the issues currently facing contract caterers remain top of their agenda.

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