One in four independent pubs are set to fail in the wake of measure announced in the Budget, according to a new survey from the British Institute of Innkeepers (BII).
BII members, independently operating pubs in every community across the UK, were already struggling to make a profit ahead of the budget announcement. The new costs of employment and increases in business rates will render 80% unprofitable, says the organisation.
The Budget, billed to support working people, will pull the rug out from under these already fragile small businesses and significantly reduce the employment opportunities they can provide, says the BII survey.
Seventy-five per cent will cut staff hours, 40% will reduce opening hours, and one in three will make staff redundant.
“The Chancellor’s Budget is devastating for our members, their teams, their pubs, and their communities,” said BII chief executive Steve Alton. “Words from the government recognising the vital role of pubs in every community and the unique social value they bring are simply hollow.
“Ahead of the budget it was clear that 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 spiraling 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 helplines.”
‘We need rapid action from government’
He added: “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.
“The government’s actions will reduce employment, investment, and cause unnecessary business failure. Those that are able to carry on will have to raise prices in an attempt to offset these additional costs. Eighty-four per cent will increase prices, with 80% raising 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 less 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 government before it is too late.
“We are calling on the Chancellor to reverse the planned increases of National Insurance Contributions and change in threshold for part-time workers, alongside reinstating the business rates relief at 75% until full reform has been delivered.
“Our nation’s pubs are unique in their social value and how they operate. They are not digital businesses, having to 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.”
