A SCOTTISH association has raised alarm bells over the possible impact of the UK Government’s new energy scheme on the hospitality sector.

The £5.5 billion Energy Bills Discount Scheme was announced on Monday in the House of Commons to support businesses with their energy bills after the current scheme ends this spring.

The offer from the Government is significantly less generous than the winter scheme. According to an example on the UK Government’s website, it could mean that a pub which was previously getting £3100 in support every month will now get just £190.

The current scheme, which is set to expire at the end of March, caps the wholesale unit cost of electricity and gas for firms.

However the SLTA (Scottish Licensed Trade Association) has expressed “very serious concerns” over the replacement plans, warning that offering a discount on wholesale prices rather than a fixed price will mean businesses will receive a vastly reduced level of support.

Colin Wilkinson, SLTA managing director, said struggling hospitality businesses are desperate for financial support.

The National: Colin Wilkinson of the Scottish Licensed Trade AssociationColin Wilkinson of the Scottish Licensed Trade Association (Image: SLTA)

He went on: “Many businesses in the hospitality sector in Scotland have had a bitterly disappointing December as a direct result of the economic crisis, train strikes, poor late-night public transport and lack of taxi provision in some towns and cities.

“We’re into the second week of January and these challenges remain.

“So, to hear that the current energy scheme is to be replaced with one that offers a discount on wholesale prices rather than a fixed cap price means that businesses will receive a vastly reduced level of support – understandably, we have very serious concerns about the impact this will have on the hospitality sector.”

Wilkinson said the new scheme does not offer much hope for vulnerable sectors like hospitality.

Energy costs currently account for between 8% to 10% of turnover for an average pub or bar, he added.

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“Energy is the second-highest cost for hospitality venues.

“The cost of this scheme, at £5.5bn, is not insignificant but when you drill down into the detail, small businesses in particular will not be much better off.

“James Cartlidge, the Exchequer Secretary to the Treasury, said that discount would be the equivalent to a £2300 saving for a pub and of course every little bit helps. But it’s not nearly enough,” he said.

Wilkinson said the organisation warned before Christmas that many businesses are set to close permanently amid the cost-of-living crisis and other ongoing pressures.

Businesses urgently need meaningful intervention on business rates, he said.