‘We are dreading what will come’: Inside the battle for Britain’s pubs as they brace for the Budget
TCrowds of happy revelers celebrating the festive season over the coming months aren’t the only thing on Fiona Hornsby’s mind as she prepares her pubs for the busy Christmas period.
Instead, like many publicans across the country, he is anxiously awaiting Rachel Reeves’ budget on Wednesday, just days away.
The Chancellor is due to unveil his financial plans next week as pubs in Britain struggle to bounce back after several years in which they endured Covid lockdowns, a cost-of-living crisis and shrinking margins.
The number of pubs in England and Wales reached a record high in 2022 and continues to fall. More than 400 final orders have been received in 2024 and two venues are now closing every day, according to trade body UKHospitality.
The hospitality industry has partly blamed successive governments for the woes and reacted to Ms Reeves’ decision to hit employers by increasing employer National Insurance contributions and cutting business rates relief from 75 per cent to 40 per cent.
Similar measures in the last Budget year or increased rumors of an alcohol tax would be disastrous, according to Ms Hornsby, who owns three venues in Liverpool city centre: The Denbigh Castle, The Bridewell and The Pen Factory.
he said Independent: “We’re absolutely terrified of what’s going to happen next week. We’re just terrified. It’s about ‘will it cost more?’ not ‘how much will it be?’.
“You expect to pull out all your accounts again, look again at all your product prices, and see where you can save money.
“Even if you get rid of a penny it all adds up. You don’t want to pass those prices on to the customer, we all understand because our own pockets are tight.”
“If you’ve only got £10 to go out with, you want at least two drinks. If you can’t get two drinks for a tenner, that’s totally wrong.”
In April this year, the month the latest Budget measures were introduced, the average half-litre quantity in England rose above £5 for the first time.
According to James Nye, managing director of Anglian Country Inns, which runs 10 pubs in Hertfordshire and Norfolk, pubs across the country have fallen off the cliff where they have been teetering for some time at this point.
He said the increase in National Insurance had compounded existing challenges, including inflation and the level of VAT facing the sector.
he said Independent The industry has been “tossed out of the frying pan and into the fire many times”, reducing pubs’ ability to employ people and leaving it with nowhere to go but up the price of a pint.
Mr. Nye added: “You have to pass on the cost. We haven’t passed it all on, but you have to pass some of it on and things get a lot more expensive.”
“When customers see us increasing prices, they think we are benefiting from this, but in fact the government is taxing so much on this pint that it is not achieving this result.
“Even though the top income is increasing, the profit is decreasing, I think that’s the scary thing. The biggest part of all this is taxes.”
“As an industry we are vaunted tax collectors. I think I paid the government about £7 or £8 for every £1 I made in profits last year.”
Facing a similar situation is James Wilson, general manager of The Pheasant pub in the Cornwall village of St Newlyn East. He said The Pheasant had its busiest October ever but only made a profit of £800 in return.
He said: “We’re not in a position where we want to make hundreds of thousands or millions. It’s a lifestyle role that I’ve taken on because I want to do it.”
“But the hard part is making sure it’s sustainable without putting myself or my family in a situation where we can’t make money to survive.”
He wants cuts in VAT and beer tax to be included in the budget. Instead, Mr. Wilson predicts taxes will rise. Ms. Hornsby offered a warning about what would happen in such a situation.
He said: “It’s the perfect storm; it never ends. Nothing ever falls down. Everything you read about pubs shows they’re closing every day.”
“I’ve also read that 30 percent of bars are floundering and about to open their doors. If there are any further cost increases, the doors will close.”
According to Mr. Nye, the social impact of closing these doors cannot be ignored. He believes this represents an irreversible change to the fabric of Britain.
He said: “The Great British Pub is one of our national treasures. It’s something we’re proud of, it’s one of our institutions.”
“But now I can say that it is harder than getting over Covid. At least with Covid, we had support and awareness.”
“The government needs to wake up because we are the solution to some of their problems,” he continued. “We can collect taxes, we can employ people, we can make huge contributions to the economy, but we need to be given the opportunity to do that. It feels like they’re strangling the golden goose.”
Kate Nicholls, chief executive of UKHospitality, said next Wednesday would be “make or break” for pubs, saying she believed the industry had “borne the brunt” of the last Budget.
He said: “Since last year’s Budget we have seen 13 consecutive months of declines in employment across the UK, with the number of people on the payroll falling by 170,000 – a shocking allegation of the damage caused by these measures.
Ms Nichols believes the sector is being “taxed” and has called for urgent action to save the country’s livelihoods, including lowering business rates, reducing VAT and addressing National Insurance contributions.
He added: “A less approach risks more lockdowns, higher prices for consumers and the loss of the vibrant hospitality that defines our communities and capital. Hospitality is poised to spur growth and recovery, but we need support and support to do this.”
A government spokesman said: “Pubs are vital to local communities, so we’re cutting licensing costs, lowering business rates and helping more hospitality businesses offer pavement drinks and al fresco dining, as well as cutting alcohol duty on draft beers and capping Corporation Tax.”
