Stock photo of people in a nightclub

The Music Venue Trust (MVT) and the Night Time Industries Association (NTIA) have issued statements following the announcement that business energy bills will now be capped under a new government support package.

Last month, five organisations representing the UK hospitality sector penned an open letter to the UK government amid the ongoing cost of living crisis. They highlighted “rocketing energy prices” that were forecast to become “a matter of existential emergency” this year, and demanded urgent government action to prevent a catastrophe to UK culture.

Mark Davyd, MVT CEO, spoke to NME at the time about the true threat posed by the looming price hike. He compared it to the COVID pandemic, which at one point saw 93 per cent of the UK’s grassroots music venues under threat of being closed forever due to losses caused by restrictions.

Yesterday (September 20), findings from a new flash poll conducted by the Night Time Industries Association (NTIA) indicated that three out of four night time economy businesses in the UK were on a “financial cliff edge” as a result of inflation.

Out of the 300 businesses surveyed, 47.7 per cent were barely breaking even while 24.8 per cent were losing money.

Now, as the BBC reports, the Department for Business, Energy and Industry has detailed plans for its Energy Bill Relief Scheme, which will offer discounts for all firms for a six-month period from October 1.

Wholesale prices are expected to be fixed at £211 per MWh for electricity, and £75 per MWh for gas for all non-domestic energy customers. Companies are not required to contact their energy suppliers, as the discount will automatically be applied to bills.

Club crowd
A crowd at a club CREDIT: Rob Pinney/Getty Images

The scheme will apply to fixed contracts agreed on or after April 1, 2022, as well as variable and flexible tariffs and contracts.

Prime Minister Liz Truss said the government understood the “huge pressure” businesses are facing due to soaring energy costs, adding that the new scheme will “keep their energy bills down from October, providing certainty and peace of mind”.

In statements issued to NME, both the MVT and NTIA welcomed these initial plans but outlined where further work and clarification is needed.

“Music Venue Trust warmly welcomes this intervention by the government, which appears at face value to comprehensively tackle the immediate short term energy crisis for Grassroots Music Venues,” Mark Davyd, MTV CEO, wrote.

“We await full details of the scheme and the method of implementation by the energy retailers and suppliers, but the base unit rate of 21.1p per kW/h laid out by these plans is sufficient to avert the collapse of the sector if it is fully delivered.”

He continued: “We understand that the government plans to bring forward controls to ensure that this target price is delivered and we look forward to reading their plans to implement this rate as a maximum for all music venues in the UK.

“The government has indicated that ‘pubs’ will attract support for longer than the 6 month initial period based on the special circumstances of the energy crisis in relation to the operation of their business. We have asked for urgent clarification that the broad term ‘pub’ includes music venues and other licensed premises essential to the grassroots music ecosystem, and anticipate that this will be the case.”

Davyd went on: “It should, however, be noted that suppliers to this sector face extraordinary financial pressures resulting from the cost of living crisis and the Covid period. We have presented to the government the case for action on VAT and Business Rates and await the statement by the Chancellor on Friday to see what further action will be taken to stabilise the sector and return it to growth.”

Additionally, Davyd has asked for the government to work with the Music Venue Trust “on long term plans to secure affordable, sustainable and resilient energy for the sector”.

“There is a big opportunity presented by this crisis to support a radical intervention into energy supply and demand and we strongly urge the government to use the period of protected energy prices to bring forward plans to permanently tackle the causes of the energy crisis,” he added.

“Music Venue real estate is a prime candidate for renewable energy investment and we look forward to working with the announced Energy Supply Taskforce to realise that opportunity.”

NTIA similarly “welcome the detail” of the Energy Bill Relief Scheme, said CEO Michael Kill. However, he added: “We remain concerned that this measure to cap the wholesale price to Energy supply companies may not result in sufficient relief being extended to business customers, given that energy suppliers remain free to impose additional mark-ups such as network charges and operating costs, which are uncapped.

“The net result of this could be a position where small businesses are still being asked to pay unaffordable energy bills of several hundred percent more than in previous years, which is clearly not sustainable.”

Kill went on to “acknowledge” that more time is needed to finalise plans, but noted that the initial proposal “will exclude businesses that renewed before the 1st April where energy costs were still untenable”.

“[It] does nothing to alleviate the high levels of energy supply debt incurred by businesses exposed to uncapped pricing over the last few quarters, and in isolation is unlikely to be enough to ensure businesses have the financial headroom to survive this winter,” he said.

“If we are to ensure the survival of our sector it remains imperative that the short term relief announced today is extended to 12 months and followed up with further action by the Government in the budget this Friday, and that such action must incorporate our core asks, specifically business rates relief and a reduction in VAT across the board.

“We will now have to wait for the announcement on Friday from the Chancellor on further support, however, we must note that the measures being discussed to date such as corporation tax relief will simply not be sufficient, given only one in four hospitality businesses would currently benefit from such measures, as three out of four are not trading profitably.”

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