Soaring Energy Costs More Expensive Than Rent And Rates Combined As It Becomes Second Biggest Operating Cost, Says NTIA
Words: Angel
August 31, 2022

Businesses have seen energy costs spiral out of control, with many seeing these costs having a greater financial impact than rent and business rates combined. Rising from the 4th biggest operating cost to 2nd in a matter of months.  

Unlike domestic energy users, businesses are not subject to the energy cap, and are exposed to rising energy costs, having to fend for themselves with no support from the Government. 

Example : A bar operator has seen energy costs rise from £35,000 (Average of 13p – 18p Per KWH) over the last 2/3 years to then double in the early part of this year to £85,000 which was unsustainable for the business. If the business were to renew today, quotes we have seen in the last week are over 145p per KWH (150K – 200K per year), making the energy bills moving forward over 10 times the energy cost 2 years ago, and dwarfing the rent and rates costs combined. 

The culmination of a range of escalating costs, from staffing, supply chain increases, PRS/PPL, and insurance are placing businesses in an untenable position, with many facing closure over the coming months without intervention.

Energy suppliers are adding to the financial pressures for many industries by demanding unachievable commercial terms, like 6 months security energy deposits to engage with new contracts, with limited companies willing to take on new contracts for night-time economy businesses. 

Michael Kill CEO NTIA Says

“Each day we are seeing businesses receive energy contract demands of between 300% – 1000% of their current contract rates.”

“The annual energy costs under new contracts for many will dwarf the combined cost of rent and business rates.”

“Making energy the second biggest operating cost for night time economy businesses, second only to workforce”

“This is unsustainable! It is vital now that the new Prime Minister and their administration act swiftly to implement a rescue package for businesses, which should include a reduction in VAT, extension of Business Rates Relief and an energy cap for SME Businesses.”

Sacha Lord, Chair of the NTIA and Night Time Economy Advisor for Greater Manchester says:

“The energy cost increases that businesses across the UK are experiencing are simply unsustainable. Without immediate intervention, I have no doubt that we will see the closure of thousands of venues across the UK, an outcome which will have dire consequences for our country’s economic growth.”

“This is the time for the current Prime Minister, Chancellor and those in the running to come together as the leading party in Government, and work with us to determine and announce solutions to this terrible crisis.”

“This is the time for the current Prime Minister, Chancellor and those in the running to come together as the leading party in Government, and work with us to determine and announce solutions to this terrible crisis.”

The Night Time Industries Association (NTIA) is the leading trade body representing the businesses in the Night Time Economy in the UK. It has more than 1400 members, including night clubs, bars, casinos, festivals, and supply chain businesses. The NTIA also holds commissions with Scotland, Wales & Northern Ireland.

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