Operators hit back at ‘disappointing’ Budget

In the lead up to the fiscal event, many voices called for support on business rates. Currently, firms receive a 75% reduction in business rates bills but this was set to end on 31 March 2025 with the most a site can receive in relief each billing year being £110,000 per business.

However, Reeves announced the relief figure will drop to 40%​v. She also revealed there will be an overhaul of the business rates system in 2026/27.

Elsewhere in the Budget, employer national insurance contributions are set to rise​ from 13.8% to 15% alongside reducing the secondary threshold, the level at which employers start paying national insurance on each employee’s salary, from £9,100 to £5,000.

The Chancellor also announced a 1.75% reduction in beer/cider duty for draught products​ from February next year.

"Which means a penny off the pints at the pubs," she added.

However, duty rates on non-draught products will rise in line with Retail Price Index (RPI) also from February 2025.

"Given the other measures announced, there are many more snakes than ladders for the hospitality sector."

Fuller’s chief executive Simon Emeny said: “The lowering of the threshold for employers’ national insurance is a crippling hammer blow to our sector.

“It disproportionately impacts hospitality – a huge employer of young people, particularly students, often working part time.

“While news of a new hospitality business rates multiplier is welcome, we don’t know what that looks like and it does not come into play until 2026/27, while the changes to national insurance contributions will be with us from April.

“I’m just utterly disappointed. The Government has chosen to pass the biggest tax burden to hospitality – a sector that delivers countless jobs and runs pubs that have huge social value to local communities.”

Young’s CEO Simon Dodds welcomed the cut to draught duty, describing it as a small step towards reducing the huge tax burden faced by the industry.

He said: “Unfortunately, given the other measures announced, there are many more snakes than ladders for the hospitality sector – a vital industry for the communities we serve and the country’s economy as a whole.”

Dodds also raised concerns about national living wage (NLW) increasing​ next year to £12.21 an hour.

“We support the Government’s move to increase NLW. Paying our people well is really important to us as they are the lifeblood of our business,” the pub group CEO added.

“However, this needed to be balanced with support elsewhere as there isn’t a magic money tree in the gardens of hospitality that can sustain a 6.7% increase in its cost base overnight. The cut in draught duty and business rates relief for next year hasn’t really touched the surface in offsetting this significant increase in cost.

“The Chancellor says she wants to stimulate growth, so do we. We are pleased the Government has listened and committed to support hospitality through reviewing business rates but this needed urgent reform, especially when costs are increasing substantially next year.

“We need the Government to deliver on this promise, which has too often been swept under the carpet and ignored.”

“The importance of the pub and brewing sector cannot be underestimated."

Fellow pub group boss Nick Mackenzie, CEO of Greene King, called for the Government to work with the sector.

He said: “Despite a glimmer of hope on the horizon for business rates reform in 2026, the layering of substantial costs on pubs next year is going to leave businesses with difficult choices around investment, prices and hiring.

“The importance of the pub and brewing sector, which employs more than 1m people and invests £2bn a year in communities across the UK cannot be underestimated."

Drop in the ocean

Mackenzie added: “While a reduction in draught duty is welcome, in reality it is a drop in the ocean compared with the cost impact of lowering the threshold for national insurance contributions and increasing the rate paid by employers.

“I would urge the Chancellor to work with the industry to help reduce the cost of doing business as a matter of urgency, with the possible changes to business rates for hospitality in 2026 needing to happen sooner to end the unfair taxation of the nation’s locals.”

Disappointment was shared by Admiral Taverns CEO Chris Jowsey who outlined the impact on community pubs.

"While we welcome the Chancellor’s announcement to cut draught beer duty for pubs, which we repeatedly campaigned for and provide a short extension to the small business rates relief at a lower level, we are disappointed with the lack of meaningful incentives to invest and grow. Community pubs remain massively overtaxed and with the wider alcohol duty still increasing, the cost of doing business is only rising for our publicans," he said.

"[The Budget] was a prime opportunity for the new Government to show its support for a sector which contributes over £34bn to the UK economy each year and provides over 1m jobs. Unfortunately, the cumulative impact of these measures will cost community pubs significantly.

"Given we will still see business rates double for a lot of pubs, it is even more important now that the Government uses the next two years to implement a proper reform of the business rates system which is fairer for pubs, an industry who is one of the most heavily taxed business sectors. This will ensure the longevity of the much-loved institution, as well as the many communities, jobs and livelihoods which rely on it.”

Various British Institute of Innkeeping (BII) members also shared their reactions on the Budget.

Justine Lorriman runs the Royal Dyche in Burnley, Lancashire. She took home the title of BII Licensee of the Year this year​ and is a former Great British Pub Awards winner​.

She said: “I feel the Chancellor’s quote ‘a penny off a pint’ is a complete insult to the hospitality industry.

“The sector has just been hit with so many increases and seeing the house cheer when this was announced shows just how out of touch they are.

“As for the reduced business rate relief from 75% to 40% - this will cost many pubs thousands of pounds.

“The national living wage​ and national insurance contributions for employers was expected but not on the scale it has been increased to.

“It will be a waiting game now to see how many packaged and spirits increase from breweries and wholesalers with the duty increasing on non-draught products.

“Disappointing the say the least!”

“I am concerned many jobs will be lost across the sector.”

Owner of south-west-based group Inn Cornwall and a previous BII NITAs winner Mark Holden estimated how the changes will cost his business thousands in additional costs.

“As a small pub group owner, I’ve done some quick calculations on what the Budget means for us,” he said.

“The business rates increase from April will be £33,500 a year but the larger impact for us is the lowering of employer national insurance contributions to £5,000. This lifts 40% more of our team into contribution.

“If current national insurance age levels and categories stay the same (which we are unclear of) then we are looking at a £41,294 a year increase.

“In total, nearly £75,000 more for our small business to find, at a time where we are struggling for profitability anyway.

“I am concerned many jobs will be lost across the sector.”

Fragile sector

Fellow multiple operator Emma Gibbons who runs Inndulge, which includes pubs in Gloucestershire warned the result of the Budget could spark more closures.

She added: “There is no doubt the rise in living and minimum wage along with increasing employer national insurance contributions will put extra stress on our already fragile hospitality sector.

“These two increases alone, we estimate will cost each of our pubs around £18,000 a year. We have no wiggle room left as we are still paying off Covid debt and reeling from the food and energy inflation of the past few years.

“We didn’t feel things could be any worse under a new Government than the previous, sadly we may be wrong.”

“Without any further support or mitigation to help cover these costs, I fear many will close for good.

“Unfortunately, this Budget has again had a disproportionate effect on hospitality businesses and we will all be facing tough choices over the next year with those who are left having to cut staff hours and raise prices, leaving little or no room for investment.

“We didn’t feel things could be any worse under a new Government than the previous, sadly we may be wrong.”

The announcement had nothing that would help grow Matt Todd’s business, he stated.

The operator who runs the Wonston Arms in Wonston said: “I’m not sure customers will be flocking to pubs to reap the benefit of a 1p cheaper pint… assuming we see it arrive to us in our buying prices.”

The Budget presents another significant challenge for sector, following two years of trying to get back to profitability and preparing for the next phase of growth, founder of The Beautiful Pubs Collective Sam Hagger said.

“We fully support the need to increase wages for our youngest team members but we believe this should be achieved through training and development to build a sustainable, skills-based workforce that benefits everyone in the future.

“[The] announcement will put enormous pressure on a sector that contributes far more than the Government acknowledges and will ultimately lead to price inflation, prompting guests to reconsider how often they can support their favourite hospitality businesses.”