Energy Standing Charges to Double for Small Businesses Across UK Hospitality Sector

Small businesses throughout the United Kingdom face a sharp rise in electricity standing charges as the costs of energy network upgrades and government discounts for heavy industry are shifted onto their shoulders. Hospitality operators, including pubs and restaurants, have voiced outrage at the near doubling of fixed daily fees which are set to take effect from April, after the announcement went largely unnoticed just three weeks ago.

Annual standing charges collected from British businesses will surge from £3.8bn to £7.5bn, representing an eye-watering 94 percent increase. These fixed costs, applied regardless of how much energy is consumed, are intended to fund national grid enhancements. However, only the 500 largest UK electricity users — primarily those in steel and other energy-intensive sectors — will be spared. These companies currently benefit from a 60 percent discount on network charges, a figure which will rise to 90 percent next year.

Kate Nicholls, chair of UK Hospitality, criticised the changes as unfair and warned that already cash-strapped pubs and neighbourhood restaurants would now be covering the cost of state-mandated relief for major manufacturers. Wetherspoons, a leading pub operator, revealed that its non-commodity electricity costs are set to climb by £7 million annually due to these uplifts. She described this measure as further proof that the energy market needs urgent reform.

Ofgem, the UK’s energy regulator, maintains that these investments are necessary to modernise the country’s outdated energy infrastructure and provide long-term stability from global energy price volatility. However, industry analysts from Cornwall Insight have identified transmission charges as the key issue within energy sector discussions. Their forecasts suggest that the new focus on boosting nuclear capacity could add another £1 billion to annual standing charges by 2031.

Small businesses continue to shoulder the highest energy expenses in Europe and, according to the Federation of Small Businesses, many are now being forced to curb their growth ambitions as energy costs spiral. Jonny Haseldine of the British Chambers of Commerce has called for fairer and more affordable bills to be prioritised for all firms. The government has defended its approach by citing previous tailored support measures for hospitality including business rate relief and advisory schemes on managing energy bills.

With 89,000 hospitality jobs lost in the past year, according to UK Hospitality’s review of official data, the debate around the burden of energy standing charges looks set to intensify as the new rates take effect. Community pubs, independent restaurants and retailers now face additional financial pressure at a time when the sector remains vulnerable to economic uncertainty and inflationary challenges.