25% of independent pubs facing closure after 'devastating' Budget

According to the poll from the British Institute of Innkeeping (BII), the cost increases will render eight in 10 (80%) pubs unprofitable.

BII boss Steve Alton labelled last month’s Budget as “devastating” for pub operators and those they serve.

Chancellor Rachel Reeves unveiled various changes that impact pubs including slashing the current business rates relief from 75% to 40%​ as well as announcing employer national insurance contributions are set to rise​ alongside reducing the secondary threshold.

The trade body stated the Government’s fiscal statement will significantly reduce the employment opportunities the sector can provide.

According to the survey, three quarters (75%) will cut staff hours, 40% will reduce opening hours while a third will make team members redundant.

The steps taken by the Chancellor in last month’s Budget will, according to the sector association, lead to job losses.

Personal distress

BII CEO Steve Alton said: “The Chancellor’s Budget is devastating for our members, their teams, their pubs and their communities.

“Words from the Government recognising the vital role of pubs in every community and the unique social value they bring are simply hollow.”

A previous survey from the trade body two months ago revealed just one in two operators broke even over the summer​, with a further quarter making a loss during the traditionally bumper months.

The researched showed despite positive trading over the season, high costs hampered profitability with only one in four making a clear profit.

Moreover, fellow industry association UKHospitality and its board members recently wrote to the Chancellor​, outlining the ‘unprecedented damage’ the rise in employment costs will inflict on the sector, warning of small business closures within a year, businesses to reconsider investment plans, jobs to be drastically cut and hours to be reduced.

On the latest poll, Alton said: “Ahead of the Budget, it was clear many pubs were unprofitable through exceptional costs of doing business, with ongoing high energy costs, embedded high inflation in food and drink costs as well as spiralling employment costs alongside repaying Covid debts.

“The Government’s response has been to ask these small, fragile pub businesses to pay additional taxes, for many 10% of their current turnover in new costs.

“The personal distress this has caused to long-standing publicans is palpable through the surge in calls to our professional helpline.

“The Government’s priorities around supporting small businesses, making work pay and regenerating high streets should have provided confidence to pub businesses that have a strong track record of being foundational in local economies and providing accessible skilled jobs in every community.”

Unnecessary business failure

He warned of the implications rising costs will have on operators across the pub sector as well as pubgoers.

“The Government’s actions will reduce employment, investment and cause unnecessary business failure,” Alton said.

“Those that are able to carry on will have to raise prices by at least 10%, driving further inflation in the economy.

“Our members are extremely concerned on how sustainable further price increases are for consumers and how this will drive down visits and vital spend.

“Our members are small businesses with the majority employing fewer than 50 people – 50% have 10 to 50 employees and 40% up to 10 employees.

“One in two of our members have an annual turnover of less than £500,000. They do not have the resilience to ‘suck it up’ and need rapid action from [the] Government before it is too late.”

Alton called for the planned increases to employers’ national insurance contributions to be reversed, for the threshold for part-time workers to be changed and for the 75% business rates relief to be reinstated until full reform has been delivered.

He added: “Our nation’s pubs are unique in their social value and how they operate. They are not digital businesses having the occupy buildings at the heart of their communities and deliver a service experience powered by people, many part-time.

“The Government’s actions have disproportionately and unfairly impacted our members and must be reversed.”