THIS YEAR'S budget did little to help caterers struggling with rising bills but the industry can group together to get a better deal, writes Jonathan Senior.
There's no doubt that the catering and hospitality industry has felt the impact of rising energy bills more than most, but unfortunately this year's Budget will do little to help.
The chancellor’s central energy announcement on March 19th was to freeze the carbon price floor, a tax on the fossil fuels used to create electricity. The tax was introduced last year in order to reduce greenhouse gas emissions by setting a minimum cost for producing a tonne of carbon dioxide.
The floor was set to rise to £30 per tonne of carbon dioxide after 2016, but George Osborne’s announcement means it will now be frozen at the current level of £18.
This change will save you money – but not much. The Treasury estimates that it will be about £15 a year off the average domestic energy bill, and while estimates for SMEs have yet to be released, the savings are likely to be similarly small. There’s also a big question about whether the big six will pass on their savings to consumers.
Furthermore, Footprint readers will be especially concerned about the damage this decision will do to the UK’s commitment to a greener economy. While some have objected that it would be fairer to roll the costs of promoting renewable energy into general taxation, most would agree that it’s important that the UK keep to its green energy commitments.
But as the energy news website Carbon Brief said: “Scrapping the plan just a year after it was introduced sent a message to voters and the rest of the world that the government was no longer fully committed to combating climate change.”
Considering the tiny projected savings, and after years of price rises, many in the restaurant and hospitality industry will rightly see the chancellor’s decision as insufficient.
The 2014 Bookatable Dining Index, which is based on industry data and recent interviews with more than 200 UK restaurants, notes the scale of the challenge that rising energy costs have placed on the hospitality and catering industry: “Despite over half (68%) of restaurants adopting measures to cut their energy usage in the last year, the vast majority (90%) say that rising energy costs have made them reassess menu prices in the last six months.”
A survey of caterers recently found that energy costs are ranked higher than costs for food, drink, rent and rates or staff. John Dyson, a food adviser at the British Hospitality Association, spoke for many when he said: “Higher energy bills and rising food costs have made it much tougher for restaurant owners to grow their business or remain profitable.” What’s the solution?
Those in the hospitality industry are used to hearing clichés about the importance of reducing energy usage: double-glaze your windows, install energy-efficient lights, etc. And it’s true that such measures will help. But usage reduction can only go so far, and such advice has been common currency for years. What people in the restaurant industry really need is price cuts now.
That’s where ThisIsTheBigDeal.com steps in. We are a national campaign for cheaper energy bills. By harnessing the collective buying power of a huge number of consumers, we can negotiate a better deal on behalf of all our members than they could get on their own.
The more people that join, the better the deal. It’s free to sign up, takes less than 60 seconds, and there’s no obligation to switch.
Jonathan Senior is head of research at ThisIsTheBigDeal.com