I’m interested in politics and am a strong believer that all citizens should, at the very least, vote with an understanding of the party policies that they’re voting for. I also believe that the party in power should do all it possibly can to make the right decisions for the country, and for our economy.
Since starting Lincoln Green in 2012, an independent brewery and pub company based in Nottinghamshire, I’ve only ever traded under a Conservative Government.
I think most would agree that they got some things right and some things very wrong over the 14 years they were in power.
I was therefore intrigued by a change in Government following the general election on 4 July 2024. What would be their approach to business and what impact would it have on Lincoln Green?
At the end of a calendar year, we often take the opportunity to look forward and reflect on the things that have happened to us, so I decided to compare the 197 days since the general election to the 197 days prior. How has my business fared under a new Government and how did it compare to our performance under the former regime?
While sales are a hugely important measure for any hospitality business, I’ve always felt that the number of transactions we’re processing is our best indicator of footfall.
In the 197 days prior to the general election our transactions were tracking up against the same period in 2023 by +8.1%.
In contrast, in the 197 days from the 5 July to the 31 December 2024, our transactions have fallen below 2023’s levels by -1.6%, representing a negative swing in footfall of -9.7%.
Negative messaging
This is the first decline in like for like transactions for our pubs since the pandemic. Have we changed the way we’re doing things? Altered our opening hours? Seen an increase in competition? In short, no.
If anything, our pub teams are doing the best they’ve ever done to attract new customers, with great service and well promoted events to draw a crowd.
I believe that this sharp fall in transactions post-general election is more attributed to negative messaging in relation to the tough decisions that would have to be made, together with the deeply unpopular decision to remove the winter fuel allowance; the initial downturn aligns with the announcement to restrict eligibility for the Winter Fuel Payment in England and Wales on 22 August 2024, and the Prime Ministers ‘Fixing the Foundations’ speech on 27 August 2024. Transactions fell sharply once again following the Budget announcement on 30 October 2024.
We face the biggest challenge of all on 1 April 2025.
Listening to my customers, I’m acutely aware of their concerns over prices and the very real cost of living crisis. When they hear that ‘things will get worse before they get better’, they begin to curb their spending. When they learn of the tax burden being placed on business, they understand that prices will need to rise as a result.
In reality, the burden on business hasn’t yet been reflected in prices. At Lincoln Green, we’ve held our prices since April 2024, when we had to compensate for the biggest increase to national living wage in a decade and the removal of the age 21 to 22 band - not to mention the implications to employers NI and pension payments as a result.
But as we know, worse is yet to come.
On 1 February 2025, alcohol duty rates rise on average by 3.5% so our input costs of the drinks we sell are likely to increase – by how much, at the time of writing, is unknown.
And then we face the biggest challenge of all on 1 April 2025.
The triple-whammy announced in the budget will see national living wage rise by an inflation-busting increase for the fourth year running, a 1.2% increase in employers' national insurance contributions (ENIC) to 15%, and a reduction in the point at which employers have to pay ENIC, meaning yet more cost.
Thorny issue
Next up, we get to the thorny issue of business rates. We know that the level of relief is being reduced to 40% from 1 April 2025.
What wasn’t mentioned in the Budget, however, was that business rateable values are being adjusted from 1 April 2025 too - and I’d wager an increase is on the cards here. Of course, business rates are being overhauled in 2026-27, meaning potentially retail and hospitality may see a reduction from then, but that’s ‘jam tomorrow’ if ever I heard it!
For Lincoln Green to stand still and recover the additional cost, we’d need to increase our prices by almost 11% - and that’s for just the known increases.
Why should business carry the entire burden? Why does the black hole have to be filled so quickly?
If our prices were to rise by that much, I’d expect a significant reduction in transactions as our customers would be unable to afford to visit as often. The dilemma facing hospitality in 2025 is how much do we pass on to our customers and how much can we afford to absorb in reduced margin?
The result will be higher prices, increasing inflation and reduced profits leading to lower investment – and potentially cutting back on staffing levels and opening hours.
I understand the need to balance the books and ‘fill the black hole in our finances’ but, the biggest question we all must ask of our new Government is, “How does this drive our economy?”
I’d urge every hospitality business owner to engage with their local MP and ask this very serious question. Why should business carry the entire burden? Why does the black hole have to be filled so quickly?
The criticism levelled at Liz Truss and Kwasi Kwarteng in their fateful Budget was that they tried to do too much too soon. Arguably, the same is true for Keir Starmer and Rachel Reeves, but as they’re backed by the Office for Budget Responsibility they’re getting away with it.
So, let’s lobby our MP’s and get this Government to listen before we completely crash our economy in 2025.