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LAST UPDATE | 30 Aug 2022
IRISH PUBLICANS FEAR the rising cost of winter energy bills, as UK publicans flag today that they might need to close due to costs.
The bosses of six of the UK’s biggest pub and brewing companies signed an open letter that urged their government to act on the rapidly increasing cost of energy bills.
Greene King, JW Lees, Carlsberg Marston’s, Admiral Taverns, Drake & Morgan and St Austell Brewery all signed the letter, which was published today.
They say that pubs and brewers in the UK are at risk of closure within months due to price hikes of upwards of 300%.
On Friday, the UK regulator Ofgem confirmed that bills for an average UK household would surge by 80% in October when a new price cap comes into force.
Nick Mackenzie, chief executive officer of Greene King, said one tenant has seen their energy bill jump £33,000 for the year.
Irish price hikes
Here in Ireland, energy bills have also been rapidly increasing, with SSE Airtricity, for example, announcing gas and energy hikes that could add over €1,000 to the combined annual cost of bills.
Environment Minister Eamon Ryan is before an Oireachtas committee today to discuss energy security amid concerns about electricity supply this winter.
Speaking to The Journal yesterday , Daragh Cassidy of price comparison website Bonkers.ie said that while Ireland’s prices may not jump as high as the UK’s, they are currently at similar levels.
Donal O’Keeffe of the Licensed Vintners Association told The Journal this morning that the two biggest challenges for his members right now are finding enough skilled staff, and “dealing with the extraordinary unprecedented increase in energy costs”.
Pubs and restaurants can be very big users of electricity, due to the need to chill and cook food, for example.
“We are hearing repeated reports of pubs facing a doubling and tripling of their energy bills over the last few months,” he said. This is squeezing the businesses’ margins and added a “ferocious expense” for them.
The LVA met with Paschal Donohoe, the Finance Minister, and Michael McGrath, the Minister for Public Expenditure and Finance, last week about the issue.
“There was a long discussion about the need for government intervention and government assistance for small businesses on energy costs,” O’Keeffe said. “We have seen the government help out households and individuals, which was very welcome – now they need to put a package in place for SMEs [small-medium enterprises] and for the hospitality sector in particular.”
The LVA is looking for the government to put in place a grant assistance scheme for the hospitality sector, and to put some stability measures on pricing in place, such as a price cap or other mechanism. “We do need clarity and stability on pricing – we can’t cope with prices as they are,” said O’Keeffe.
Energy prices have already been increasing and are set to increase even more as winter comes in, leading to major fears among hospitality owners about what’s ahead.
“Right now as it stands today, the impact of the energy cost is the squeezing of margins,” said O’Keeffe.
Most progressive businesses have taken steps to make sure they are reasonably energy efficient. Long-term there needs to be a furthering in the retrofitting schemes and energy efficiency scheme.
He said that the government needs to ensure there are measures in the forthcoming 2023 Budget, to be announced at the end of September, to help hospitality businesses deal with the increased energy costs.
Asked if there are fears around pub closures in Ireland, O’Keeffe said:
I don’t think anyone is talking about closure. There are concerns about where it goes into winter and next spring. There has been a doubling to tripling of energy costs so far, so it would be a huge threat if it goes 30 – 50% more, there would be serious viability problems.
He said that each business will have to judge themselves how to deal with the costs, but some are looking at the prices they are charging customers, particularly businesses that are very energy intensive.
“Ultimately the business has to be profitable to survive,” he said. “There is real concern: where does it go from here?”
Pubs are already trying to recover from the “extraordinary crippling impact” the Covid-19 pandemic and lockdowns had on the pub trade, though O’Keeffe said that his members have been pleased by their level of business since reopening this year.
“There are plenty of pubs in a weakened financial position after two years of closures,” he said. “We fully believe the government understands the seriousness of the issue and we are waiting to see what they are gonna bring forward in the Budget.”
Squeeze yet to be felt
A spokesperson for the Vintners Federation of Ireland said that because publicans are coming out of the summer period, “a squeeze on energy costs has yet to be really felt”.
They added that winter will only add to energy consumption.
“The trouble is coming down the track and coming on really quickly; people are getting a sense of where we are going with this. It’s hard to get your head around how big the increases are going to be.”
In September 2021 the VFI had a deal with one of the energy suppliers for 14.73c per unit of electricity – that rate is now 64c per unit cost.
That’s what we are facing into – that’s what our members are facing into, unbelievable price rises.
One member of the VFI said he had experienced an 85% increase in his energy costs compared to last year. He had spent his entire energy budget for 2021 by the end of July 2022.
“He is facing more increases so he thinks by the end of this year his energy costs will increase 230% on 2021,” said the spokesperson.
The VFI said that publicans are also worried about the mooted idea by Green Party leader Eamon Ryan of bringing in premium pricing for anyone using energy from 5 – 7pm, “which would be a hammer blow to the hospitality sector”.
Asked about whether the VFI thinks its members might close their pubs, the spokesperson said: “What we are going to be looking at is pubs closing maybe Monday to Thursday, maybe some publicans deciding they are going to be closing for the entirety of the winter. And if energy bills are going to be as big as we think they will be, some pubs will close.”
The VFI also met with Donohoe last week to outline its concerns. It believes some government intervention will be required, whether a cap on prices for small businesses or a grant scheme, for example.
“We’re agnostic as to what the intervention will be – we just know given the potential of these increases it is going to have to be something substantial.”
Restaurant pressures
Pressure is also being felt by restaurant owners, Mike Ryan of Coqbull and Cornstore in Cork and Limerick told The Journal.
He said that the Cornstore in Cork is up €70k on the last year on the cost of energy bills alone, while Coqbull is up €45k.
“To be honest I’ve never looked at energy consumption so closely and it’s shocked me,” he said. “We’ve known this was coming down the tracks. I know sometimes you get sensationalist headlines but I’ve been speaking closely with our whole team, as in the operational team, for the last couple of weeks now and there are times that we’re going to have to target energy consumption.”
He said that while people might assume there are big profit margins in the restaurant industry, that isn’t always the case – particularly after the pandemic.
“There has to be action – there has to be positive action,” he said, adding that the energy crunch is affecting people in business but also those in households, so everyone should be helped when it comes to energy supports.
“We need to have a positive message coming out that businesses know that there is going to be help and support.”
Ryan said that there is only so much energy inflation, and general inflation, that businesses can absorb before they have to “make difficult decisions”. These decisions could be with regard to the labour force, or opening hours, for example.
“Business are not afraid right now to make tough decisions with targeted opening hours, because if we’re not proactive then we won’t be open next year,” said the business owner. He suggested some restaurants might find themselves only opening when they know they will be busy.
“We are on the rise of inflation – we haven’t hit the peak,” he added. Ryan said the government needed to also ask why energy companies are making such high profits right now, and how that is being accepted.
- Additional reporting from PA
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What is never mentioned in the media is that Michael Martin and his party bankrupted this country with no growth for 10 years. Had to beg for money from the IMF. All because of their housing policy, etc I haven’t forgotten has any one else ?
@Jimmy Donovan: FG would have done exactly the same if they had been in government.
Their 2007 election manifesto was similar to FF except they also promised to scrap the introduction of eircodes
@Thomas Sheridan: They also wanted to reduce stamp duty which would’ve put more money in developers pockets. Same party different name
@Eddie Garvey: The dogs in the streets know FFG are one party. By calling it two, they get twice the jollies!
@Jimmy Donovan: I haven’t forgotten about Sf screaming across the dail that every type of spending should be increased because ‘the country is awash with money’…..we would have been in a way worse situation if that lot have have been in…..I haven’t forgotten about that any one else?
@John Paul: SF hasn’t spent one cent of government money in this country. Each man, woman, and child currently ows 43k per person. Interest on this is 14 million euros per day.
@Jimmy Donovan: have a read of this article from 2001 by Greg Palast. The interview & verified documents are from Joseph Stiglitz, former chief economist of the World Bank.
If people think FF or FG or any other political party, in Ireland, have been running Ireland for the last 67-70 years, they’re sadly mistaken.
@Mr Inbetween: maybe read the linked article before stating “facts”
Ireland has not been an independent country since joining the EEC
@Jimmy Donovan: Public Sector greed also had a lot to do with the Government going bust back in the day.
What I would love to know is how such a huge gap between housing required and actual supply has been allowed to develop
We now have a census every 5 years & we have known since the 1990s that the population is going up.
Back in simpler times it would have somebody’s job to ensure enough housing was being built
Now we are tripping over ourselves with experts and reports, but nobody puts their hand up on such a fundamental issue.
And is if that’s not enough we learn that E 1 billion a year is now being spent on accommodation for asylum seekers
This is not a formula for a happy contented country
@Gerry Kelly: the gap is there because it is a controlled market, and those influencing control are interested in making the biggest profit possible from each unit (developers) aided by incompetent govt and govt who are completely competent but rigging the whole thing for their benefit (they or their close allies are in the property game)
@Eddie Garvey: 100% exactly what I’ve been saying for years. The public are being hoodwinked by a combination of the banks/government/media and developers for the last 10 years approx. The shortages of ‘to buy’ and more recently ‘to rent’ is by design and will end in disaster for Joe soaps nationwide
@Gerry Kelly: Building stopped completely in 2008 but the population kept growing.
Over 1 billion spent on asylum seekers last year.
More than half of new PPS numbers in Ireland were issued to people from outside the EU last year.
Non nationals account for 36% of those in long term Job Seekers Allowance. 90% rise from 2019.
Highest number of working visas for Australia issued to young Irish people in 2023 since the height of the crash in 2009. Never mind all the Irish going to work in Canada, UK, Dubai etc.
We are a small country on the western edge of Europe. We cannot take all these people whilst our own leave. This is population replacement before our very eyes.
6 murders in 6 weeks all involving foreign nationals.
Ireland doesn’t have a housing problem. Ireland has an immigration problem
@JagTune: Exactly right
@JagTune: very well said. Be ready to be called all sorts of names including racist just because you point the reality.
@Mr “JonnieBoy” Johnson: Do you really care if the race-baiters call you names?
@Housing Hunger Games: this is the same public that voted in Martin and Harris on a first count ,I wouldn’t put alot of stock in the brain power of the Irish voting public at the minute.
Fact is we have a massive problem,these people are not like the polish who all appeared at the start of the boom,they have no intention of working in factories or building sites,massive dole merchants and feck all else
Brown field sites could be brought into use overnight if the political will was there, we saw during covid how quickly things can be done with emergency legislation.
Didn’t they say that the last time and the time before that and the time before that.
all fine and well but will Lowry approve
@Gerry Ryan: depends on if he can sell a discounted property to his kids through a shelf company. Sorry, that was some Lowrey guy, I get confused sometimes
@Gerry Ryan: Depends if he has an interest in it, like the LIDL that was built during Covid when not one house was allowed to be built.
After engorging themselves with salary increases.
What about easing the co.councils ban on mobile a nd chalet type homes in large gardens in country? Remember the man Tipperary Council took to court for housing himself in one…on his own land He is not the only one. Recently the same to man who housed his relations in Limerick. Many could house a son or daughter in their instead of them paying huge rents,miles away from elderly parents
@Helena Camella Cummins: There is no land in this country that the state doesn’t own, read the constitution and he didn’t bother getting plannjng permission, the part that a lot like to forget. I mean that is the first thing to do before building anything.
Housing for all is nonsense. No country can house 8 billion people
So we’ll have a 5k fine with near zero enforcement. Given the money to be made in short term lets, this will just be seen as a cost/liability and ignored
This is just the same meaningless talking in circles around the issue of housing as always, while actually doing nothing to solve it.
The brass neck of these absolute muppets and the contempt that they show to the people of Ireland beggers belief. They now say that they need time to draft a plan to deal with the housing crisis and a response to it????
They are acting like they didn’t just spend 4 years in government supposedly addressing the exact same housing crisis????
But now they say that have to start from square one, and the people of Ireland are going to just swallow this rubbish all over again?
Nobody likes the idea of lazy people that don’t want to work ever, getting low cost social housing while milking the system, but we are beyond that as a nation.
Because families in which both people are working full-time cannot afford a place to live, those people need access to social housing now, but its not only them, young people are facing the prospect of being homeless or under threat of homelessness regardless of how hard they work to build a future for themselves, older people on pensions are also struggling to pay for accommodation, is this what we want our government to deliver to the people of the country, more excuses, grand plans that deliver nothing and meaningless soundbites?
There is only one answer to the housing crisis, building social housing now on a massive scale.
Same course of action that crashed the economy as that’s there only plan. Protect their business lobbyists friends that roll up every year that control the land banks
I would recommend more tax breaks for the buyers and keep tax breaks for the developers. What would I know, I’m not on a TDs salary and live in the real world.
“Housing for all plan”…heard that years ago…yaaaaaaaaawn.
Yet again our so called Government and opposition are so full of sh**.
Keep it simple – no short term letting without Planning Permission . Enforce it correctly with huge fines for owner and operators like Air B&B and Booking.com. – this means the sector will settle down and inflated prices all round will be more controlled!
FG is
FG
Stop talking and DO something radical, that does NOT mean cancel the RPZs, bring in much tighter controls so that our own citizens can afford to live properly.
have your say