The Campaign for Pubs is calling on the Chancellor, Rachel Reeves, to understand the crisis facing pubs and many UK small breweries and ensure that the forthcoming Budget, on 30th October, helps pubs – and doesn’t increase costs or taxes on them. There has been speculation of a rise in National Insurance and wages, which many pubs and publicans simply cannot afford.
The cost-of-living crisis has seen rising prices and business costs, including spiralling energy bills, at the same time as many consumers have had to reduce their spending. This ‘perfect storm’ of trading circumstances has led to a worryingly high rate of pub and small brewery closures. This is made worse by the fact that pubs are having to pass on at least some of the rising costs faced by brewers and other suppliers, making visits to the pub even less affordable to those on lower and middle incomes. The current crisis of course follows the lockdowns and restrictions during the Covid-19 pandemic, with many pubs still paying off considerable Covid debt, despite the fact trade has not returned to pre-pandemic levels, due to the cost-of-living squeeze.
The Campaign has written to the Chancellor and expressed very serious concern on behalf of UK publicans of the potential impact on pubs of the rumoured rise of employers’ National Insurance contributions as well as a potential increase in the Minimum Wage/National Living Wage.
Pubs and publicans simply cannot take any further increases in business costs in the current climate and if these are announced in the budget, it will undoubtedly lead to many more closures, given how critically marginal some businesses already are due to the cost-of-living crisis. Many pubs will have to lay off staff or cut staff hours just to survive, meaning the loss of potentially thousands of jobs up and down the country. Publicans have expressed dismay about this, at a time when the Government needs to support small businesses, to have any chance of getting the country out of the current crisis and back to a period of sustained growth.
The reality is that many publicans are currently taking little or nothing from their pubs, due to the very tight margins. A considerable proportion make less than their own staff and are in effect working for less than minimum wage, something that appears not to understood by Government seeking to impose even more costs onto struggling small businesses.
The Campaign for Pubs has urged the Chancellor not to increase National Insurance on small businesses, or the damage will be significant. Where there are to be any increases in costs for small businesses that will have a further significant impact on pubs and other small businesses, they must be balanced with vital tax relief or they will simply lead to reductions in staff numbers, plus the further loss of pubs.
The Campaign has called on the Government to maintain existing reliefs, notably on business rates, which is essential to help pubs get through the current crisis. It has also called for the promised overhaul of the whole business rates system, action to tackle unfairly high energy bills for small businesses and the cancellation of Covid debt for pubs with outstanding and unaffordable Bounce Back Loans. Due to the cost-of-living crisis, alongside inadequate Government support to compensate for the loss sustained by Covid lockdowns/restrictions, many pubs have not been able to ‘bounce back’ and can’t pay off these debts.
The Campaign stresses the need for direct support, not tinkering with beer duty and other alcohol duties, which does not make any meaningful difference to help pubs and publicans. Any cuts to beer duty funnel tens of millions of pounds of tax relief to the global brewers and giant pubcos, who do not need support, whilst having a negligible impact on pubs, publicans and pub customers. Even Draught Duty Relief is actually principally beneficial to the big brewers and has a very small impact on pubs.
Overall, the Campaign is urging the Chancellor to listen and to deliver a package of direct and targeted support that will enable pubs and small brewers to get through this cost-of-living crisis:
- No additional taxes (including NI) or costs (including wages) without equivalent tax relief.
- Keep all current relief in place including business rates relief and extension of zero business rates for the next fiscal year and a revision for 2024/25 to increase the multiplier for hospitality to reduce rates, plus an increase in the zero-rated threshold to £20,000 as well as rural rate relief.
- Announce a complete overhaul of business rates and a commitment to tackle the unfair and unique way in which business rates for pubs are calculated. Business rates relief should be extended to small brewers and other pub suppliers.
- If there is any scope to reduce taxes in this budget, the focus should be on business rates and VAT for small businesses – direct support, not alcohol duty cuts, that don’t help pubs.
- Decisive and meaningful action on energy bills for businesses. SMEs often pay disproportionally high bills, while larger chains have negotiating power to access lower tariffs.
- A cancellation of Covid debt for pubs/small brewers with unaffordable Bounce Back Loans.
Longer term, the Campaign is calling for a new ‘Small Retailer Relief’ to be introduced in the VAT system, whereby independent pubs and other independent small retailers would have a lower rate of VAT than huge chains. This would mean that small, independent businesses – including pubs, shops, cafes and restaurants – can receive appropriate support from Government without at the same time providing unnecessary and costly tax relief to huge companies and chains.
The Campaign for Pubs has also called for wider action from the Government, to help pubs and stop unnecessary pub closures.
Neither the budget nor the Treasury alone can ‘save pubs’ without tackling other serious issues, so the Campaign has also called on the Government to:
- Reform the planning system to stop the current endemic asset stripping of pubs being deliberately bought/closed for conversion/development. Planning law must include the simple principle that no pub of 50 or more years standing can be converted or demolished until and unless it has been properly and openly marketed for at least a year at the independently assessed value as a pub and sold at that price, if there is an offer.
- Properly tackle the unfair and often exploitative tied pub model. If the Government really wants to help hard-pressed pubs and reduce the price of a pint, then it needs to take action to stop the rip-off prices many publicans are forced to pay due to the beer tie, which is directly responsible for raising prices in pubs and forcing many publicans to leave their pubs.
Dawn Hopkins, Vice-Chair of the Campaign for Pubs and a publican in Norwich said:
“The situation for publicans, their staff, and suppliers across the country is very concerning. The Government must recognise the severe consequences of any measures in this Budget that could put further strain an already critically damaged sector.”
“It is deeply worrying that at this hugely challenging time for pubs, instead of offering support to get us through the cost-of-living crisis, the Government is considering slapping extra costs onto publicans through increases in National Insurance and wages. This is simply not possible for many pubs at the moment and so all it will do is see staff hours cut, people laid off and more pubs closing. This is all the opposite of growing the economy, which is what Rachel Reeves says she wants to do, as well as putting at risk thousands of hundreds of pubs and thousands of jobs”.
“Our pubs urgently need support, and it is vital that the Government listens to the voices of publicans—if not, we risk losing even more pubs at an alarming and unprecedented rate.”
Paul Crossman, Chair of the Campaign for Pubs and a publican in York said:
“Given the last Government’s catastrophic record on pubs we are now looking urgently to the new Chancellor to do the right thing for communities everywhere by providing meaningful support to our remaining pubs, as well as the employees and suppliers that rely upon them for a livelihood. Small independent pubs and suppliers must be a particular priority as so many are now on a razor’s edge of sustainability due to rising costs, legacy Covid debt and a range of other external pressures.”
“All existing reliefs must be kept in place and further support will be needed if the Budget imposes any further costs on these vital small businesses that are so often the last surviving community hub for their local area. This Budget is the moment where this Labour Government could and should signal the end of a prolonged and painful period of misguided and neglectful policy which has cost the UK so much of its vital communal infrastructure.”
Phil Saltonstall, brewer representative of the Campaign for Pubs and founder of Brass Castle Brewery said:
“The UK’s small brewers are desperate for some signs of hope from the upcoming budget. Year on year, budget adjustments revert to an alcohol duty soundbite that favours multi-national brewers rather than pubgoers and presents big beer with yet another competitive advantage over our indigenous beer manufacturers. We are watching fantastic and innovative SME brewers blip out of existence on a daily basis as they fail to cope with the myriad obstacles to market access and trading penalties imposed or reinforced by recent budget measures and other government policies.”
“Small UK brewers employ disproportionally more staff than the multi-nationals, provide product range to consumers, provide revenue to the exchequer and are always the first businesses to flexibly embrace new technologies and green opportunities. We urge you to make good on the promise to help us be an engine for growth, rather than be sacrificed for the convenience of the Government’s relationship with big beer lobbyists”.
