Northumberland business reveals staggering increase in electricity costs as new study shows the impact of rising bills

The award-winning Breamish Valley Cottages, near Powburn, are highlighted in a State of Rural Enterprise report from the National Innovation Centre for Rural Enterprise (NICRE).

Breamish Valley Cottages director Peter Moralee said: “Rising costs are affecting every facet of the business.

"Our electricity costs have risen by 100% - gone up by £50,000 - which is a significant amount of money to take off the bottom line.

"Alongside that, everything has gone up be that oil, staffing and input costs.

"Working in the services industry, yes, we can put our prices up, but we can only go so far and a lot of those costs we have had to absorb.”

He added: “Having holiday cottages, we’re always trying to keep ahead of the game, in terms of making everything as luxury or as up to standard as we can and that involves a lot of investment.

“We always need to keep moving forward but that growth is being slowed quite significantly because of rising costs and one of the biggest ones is interest rates.”

Two-thirds of rural firms in the North East - increasing to 69% of businesses in more remote areas, and 82% in the hospitality sector - report that rising costs have significantly impacted cash flow over the last year, with four out of 10 of them reducing, cancelling or postponing investment.

But, as in the Covid-19 pandemic, the survey showed that rural firms have been particularly resilient with 41% increasing their turnover, compared to 35% of urban businesses, and 18% decreasing their turnover, compared to a quarter of urban businesses.

NICRE director Professor Jeremy Phillipson, Professor of Rural Development at the Centre for Rural Economy at Newcastle University, said: “It is crucial for businesses in rural - as well as urban - areas to be able to invest in order to grow and it is a considerable challenge for future innovation and expansion that rising costs are curtailing those efforts.”

Rural firms responding to NICRE’s survey, like their urban counterparts, highlight rises in the costs of goods and raw materials, and increased costs of energy or power as having the greatest impact. Yet the cost of fuel for transport was identified as a much more prominent challenge by businesses in rural areas.

Prof Phillipson added: “While the challenges of increased costs have been widespread for rural enterprises, the effects have been compounded for dispersed and remote businesses which face greater average travel distances to access supplies and support, and to distribute products and services, as well as fewer garages and higher fuel prices.

"This crisis could, therefore, worsen the long-standing challenges facing more remote rural economies and impact further on growth potential.

“On a positive note, the crisis is stimulating rural firms to reduce energy consumption and to think about their energy efficiency and, therefore, provides an important opportunity for engaging with and supporting businesses to decarbonise and transition to net zero.”

The report has been welcomed by the Department for Environment, Food and Rural Affairs and the Country Land and Business Association (CLA).