Operators left in fear following Budget announcements

The data estimated 9,000 pubs face closure within the next twelve months, leaving the industry in an "environment of uncertainty". According to UKSA, following the recent Budget announcements, which entailed a cut in tax on draught beer and an additional 3.65% rise in tax on spirits, just 1% of publicans expressed optimism for future trade within the coming year. 

Before the Budget more than half (58%) of publicans believed the future of hospitality based businesses looked to be negative, with only 15% believing it to be positive. A recent UKSA survey also showed 88% of bar operators and publicans said the recent one penny deduction on pints announced by the Chancellor would have little to no impact as they fight to keep doors open, particularly amongst rising taxes and the cost of living for customers. 

Dwindling optimism

Spokesperson for the UKSA, and founder of Westminster-based Thamesis Dock pub Neema Rai said: “We waited patiently for the new Government to come up with the support they had hinted at for so long but now we can see the reality is just a gimmick on draught drinks and a massive increase on spirits.” It’s a blow to publicans and British distillers and will hit the pockets of working people hard.”​

Rai explained support is needed for owners of managed independent pubs, or neighbourhoods may face an influx of bigger “chains”, which may be only accessible to groups that can afford them. 

Spokesperson for the UKSA and licensee of the Gladstone Arms in Borough, South London, Megha Khanna added: “The hike in spirits duty is going to impact the huge number of customers who come to a pub for a G&T or a cocktail. Pubs are more than pints and this is going to hammer our trade."

She continued: “As for trying to make people think that a 1p cut off a pint is some sort of bonus, it’s incredibly patronising – it’s a gimmick which won't hide the fact that thousands of pubs are on the brink.” 

Extinction of small businesses

Khanna explained she believed the effect of the Budget announcements will cost jobs, reduce investment within the sector and ultimately damage growth. She stated: “​Many publicans and distillers had hoped the new Labour Government would support their business, not least with Keir Starmer declaring ahead of the general election that he would ‘back Scotch Whisky to the hilt'”. 

The Chancellor also added a 3.65% hike in tax on sprits in her Budget. Within the pub trade, 77% were surveyed and admitted this measure alone would negatively impact the industry. One publican told researchers at UKSA the Budget was “a total joke”, adding “we are all slaves to the Government”.  

Another said they believed it would lead to the “extinction” of their small business. Fuller’s chief executive Simon Emeny previously stated he was “utterly disappointed​” at the Budget outcome, adding he felt the Government had chosen to pass the biggest tax burden to hospitality. He explained the industry not only delivers countless jobs, but also runs pubs that provide a huge social value to local communities.

Under the last Conservative Government previous Chancellor Jeremy Hunt also increased tax on spirits by 10.1% in his 2023 Budget. Hopes amongst distillers and publicans included that Keir Starmer would support them by reversing the increase in duty, as he previously stated he would back ‘scotch whisky to the hilt’ before the election. The new costs of the increased spirits duty, alongside the retail Price Index inflation​, is set to come into effect for distillers and wine makers next February.