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Gloucestershire Business News

Experts ring the alarm over 'cost of doing business crisis' in Gloucestershire

Anxiety is increasing over how Gloucestershire traders will cope with energy increases without going bust or implementing untenable price increases.

Alarms bells have been raised about a "cost of doing business crisis" spreading across the county.

It comes after landlady Miranda Richardson said she was being forced to give up her Northampton village pub after her energy bills hit nearly £30,000 a quarter.

Businesses experts are worried similar closures could soon happen here if the government does not do more to ease the pressure.

Sam Holliday, FSB development manager for Gloucestershire, Bristol, Bath and South Gloucestershire, said: "We are suffering from a genuine 'cost of doing business' crisis and it is vital this is acknowledged. Otherwise the SME-led recovery in both economic terms and employment could be badly hit.

"Businesses are really trying their best to absorb these ever mounting costs and not pass them onto their struggling clients and customers but unless they get more support this is simply unsustainable, even in the short term, and as such more potentially viable businesses could sadly go under."

Gareth Fulford from Purslane Restaurant in Cheltenham said one of its fish suppliers had seen costs for transport rise by £15,000 a month and a trip out by fishermen had risen from £4,000 to £9,000.

He said: "We don't feel we can keep passing on these price rises because people just won't be able to afford to come out. Slim margins are being squeezed even harder."

Mike Huysinga from The Exmouth Arms in Cheltenham said the 175 per cent increase in gas prices as well as the increase in petrol was "pushing margins".

He added: "The knock-on effect that has on just about everything from suppliers to customers is massive. Prices will need to continue to rise as inflation hits 10 per cent

While David Orme from The Find coffee house in Cheltenham said the unpredictability of costs was a "major concern" and made it hard to plan menus and prices.

Lindsey Holland is owner of Cleeve Hill Hotel and member of TURF, which supports owners of independent hospitality businesses within Cheltenham.

She said members had seen pricing increases across the board. "Some have had their fixed-price utilities contracts cancelled and had to negotiate new with much higher pricing, others have seen their rates increase dramatically, with one BnB seeing their gas prices increase by 82 per cent. These increases will be crippling when the colder months approach.

"Discussions amongst the group about how far increasing prices might be borne by guests versus losing so much in margins it makes the business untenable are not uncommon, and really upsetting when you've put your heart and soul into the business."

She said the 20 per cent VAT increase on hospitality made it clear the government had "little understanding of how critical things are" post pandemic.

Steve Gardner-Collins, director and chair of Visit Gloucestershire, said a serious review of what a post Covid and post Brexit UK looks like was needed.

He said: "The energy crisis is causing huge levels of anxiety amongst business owners who are juggling multiple issues during this period of uncertainty and post pandemic crisis.

"The hospitality industry continues to face problems in recovery, sustaining costly supply issues - staffing supplies, food and drink prices, are all compounding the endless headaches."

Ian Mean, director of Business West Gloucestershire said bosses were having their successes "blunted" by soaring energy prices.

He said: "Firms I talk to generally have good order books but their costs are being challenged especially by energy prices which is in turn forcing them to raise their prices."

In its quarterly economic survey in April almost 60 per cent of businesses said they were facing pressures to raise their prices because of energy and materials costs.

Half of those companies surveyed expected their energy bills to increase by between 11-50 per cent year on year.

Mr Mean added: "We need a government that is alert and prepared to help business ease the mounting pressures they face."

Mr Holliday said the government should give businesses energy cost reductions and one-off grants to help. Microbusinesses should be bought under the same Ofgem price cap protection as householders and given support via the business rates system, with discretionary help for firms which do not pay rates.

David Owen, CEO of GFirst LEP, said:"It's the biggest issue of our time economically.

"Medium to long term we need to drop reliance on gas and coal and importing energy and have a much bigger investment in sustainable energy.

"Short-term we need some help for businesses to get through what is going to be a really bumpy 12 months."

Staffing issues are also hindering recovery with businesses struggling to find employees and pay them enough.

The latest labour market statistics show pay continuing to fall behind inflation.

Average weekly earnings were 3.4 per cent lower in real terms than a year earlier in April, the month when the cap on household energy bills changed.

Matthew Percival, CBI director for people and skills, said: "Not being able to hire the people they need is a major drag on business confidence, so the Government should immediately allow firms to use their Apprenticeship Levy to tackle shortages and update the Shortage Occupation List."

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