Guy Adams, who ran the Isle of Barra Beach Hotel in the Hebrides for 16 years, may have to close its doors to guests for at least a year because spiraling energy bills make the business untenable.
The hotel owner’s annual electricity bill is expected to rise from around £25,000 to £120,000 on top of an expected wave of price increases from suppliers, who are also facing rising costs.
He says the boutique hotel, which he claims is Britain’s far west, will have to double the rates it charges its guests next year – to a level Adams believes cash-strapped vacationers won’t pay – unless Liz Truss makes a “pro-business” company. “Promises to fast action.
“We can’t quote anyone looking to book their next summer vacation because we can’t give them a price,” he says.
“But we’re looking at that we’ll have to double our rates. If we do that, we won’t expect anyone to be able to pay that, given everyone’s high costs. We’ll have paper rates and we won’t have work.
We should now look to not open next year – closed for at least a year. We have no choice but to put it on the table given the massive increase in energy costs overnight. It would be cheaper not to open than to open.”
Truss campaigned as a pro-business leader with promises such as abandoning the recent increase in National Insurance and a planned increase in corporate tax, as well as pledging to reform business rates to win over Conservative Party members.
Responding to Truss’ appointment, Sir Rocco Forte, the Brexiter and Tory benefactor who dealt a blow to Boris Johnson earlier this year, said: “From what I’ve seen of her, Liz Truss is a very assertive person and has a very clear idea like why She should do it. I’m very optimistic.”
Forte added: “I think she obviously has to tackle the cost of living and energy. She said she’s going to cut taxes and I’d like to see how she does that.
“We’ve had many years of seeing the same policies under discussion and very little growth. It’s time to start something new.
The circumstances that the country and indeed the world are going through make it very difficult to accelerate this. It has also indicated that it will consider removing the restrictions, which is reasonable.”
For the UK’s 5.5 million small businesses, the most pressing issue is undoubtedly the rising energy costs. Consistently refusing to specify during her campaign what she will do to combat rising energy bills, Truss has promised to reveal plans by the end of her first week in office, but is looking to freeze some energy bills.
“We’re looking forward to you doing something about energy bills, even halving the increase would still be an annual £60,000 increase – it’s an absolute killer,” says Adams.
“The National Insurance cut is going to be of little value because if we don’t open next year we won’t have any employees to pay anyway. The tax cut will take a year before it starts, and by that time we may be bankrupt anyway.”
Last week, the British Chambers of Commerce published its proposals including an emergency energy grant for small and medium businesses (SMEs), a temporary reduction in value-added tax to 5% as well as the cancellation of the NI increase.
On Monday, the Institute for Export and International Trade called on Truss to immediately set up a task force to help small, medium and micro businesses with issues such as rising energy costs.
said Martin McTag, national president of the Federation of Small Businesses (FSB).
“Small businesses are crying out for a comprehensive response that will lower taxes, limit spiraling bills, and provide direct cash support to small businesses.”
Adams says the Barra Beach Hotel is having its worst year in its 16th year that he has owned the company. The hotel survived a 19-month shutdown during the coronavirus pandemic, thanks to government support schemes, but current occupancy rates of less than 50% are unsustainable without further support.
“This may not be the pandemic, but the exceptional circumstances we are facing now mean that the government must play a central role in supporting our economy,” said Tony Dunker, director-general of the Confederation of British Industry.
Truss’ rival, Rishi Sunak, who was defeated by nearly 20,000 votes, has criticized its unfunded plans as posing a risk to the UK economy already heading into recession.
“If we are serious about getting the UK to grow again, and to ensure that any slowdown is short and superficial, we need a serious growth plan,” Dunker said.