National Insurance contributions changes and the decreased level of business rates relief on for pubs must be cancelled, says the BII’s chief executive, Steve Alton.
He expresses this in an open letter to chancellor Rachel Reeves today, urging her to postpone the changes until full and meaningful reform is implemented.
“The impact of these devastating tax increases is already being seen in independent pubs, with widespread cuts to staffing, opening hours, and investment plans, said Steve.
“Despite many BII members reporting better than expected trade in January, thanks to the diversification of their businesses, attracting different types of customers, their already high overheads mean this is simply not translating into profit. In a recent members’ survey, 80% of operators expect to be unprofitable due to the planned tax rises.
“Pubs offer so much more than just a brilliant pint, and operators have worked incredibly hard to provide a safe space for everyone to connect, celebrate and socialise, as well as providing vital local employment and diverse career opportunities.
“The choices made by the chancellor are now fundamentally undermining growth, investment, and employment in our sector, with quality operators having to make difficult decisions regarding their teams and the future of their businesses.
“Cancelling the planned tax increases for pubs, which are in addition to an already unfair tax burden they are facing, will unlock their potential for growth, allow them to expand their teams, providing essential skilled, local employment and prevent unnecessary business failure.”
Steve Alton
The letter in full
Dear Chancellor,
I am writing to you to ask for the planned tax rises on the 1st of April, specifically the increases in employment costs through National Insurance contributions (NICs) and increase in business rate costs, to be cancelled. Our 13,000 members, independently operating pubs across the UK, are already taking action ahead of these planned tax rises resulting in lost jobs, investment, and for an increasing number, lost businesses, livelihoods and homes.
These small, foundational businesses in every community are viable, many have significantly adapted their offering to meet new customer needs and are thriving despite the exceptional cost pressures they are facing through embedded inflation in the cost of goods, ongoing high energy costs, and significantly increased costs of employment. However, whilst many are seeing strong sales, this is simply not converting to profit, hampering their ability to invest and grow. Our member survey prior to the budget highlighted that only 1-in-3 pubs were profitable, with many at breakeven. Since then, the impact of the tax rises hitting employment and property, by far the largest overheads for pubs, will potentially render 80% unprofitable, and they are having to take drastic action to ensure their survival.
Long-standing, successful and award-winning pub businesses across the UK are taking this action to weather further excessive tax increases, with pubs already contributing £1 for every £3 of sales straight to the Treasury.
- Mark Robson, Managing Director of New Dawn Pubs, operates three large successful pubs in Surrey and Hampshire. The additional taxes in April will cost him £240,000 which is 5.5% of his turnover. He has already made redundancies, reduced opening hours and cancelled all investment, which would have been used to drive further growth.
- Mark Wrigley, owner of the Atlas Bar in central Manchester has grown his business threefold to over £1m in turnover since 2012. Cost pressures have resulted in these strong sales only delivering £60,000 in profit and the planned tax rises will completely wipe this out. Plans to grow the business have been stopped and 4 redundancies have been made.
- Emma Gibbon has operated the Hewlett Arms in Cheltenham for over 10 years with a loyal customer base. She is now reducing the size of the team by 5, shortening kitchen opening hours, cancelling any further investment and increasing prices.
- Matt Todd operates the Wonston Arms, a drinks only community pub in Hampshire. Over the last 10 years he has grown his pub business, reconnecting his community and through relentless innovation has won multiple awards. He supported three part time employees in his busy pub and has now had to let them all go, operating it on his own and cancelling his plans for growth.
These vibrant, award-winning pub operators at the heart of their communities have enormous potential to grow; employing larger teams, providing skilled employment opportunities, investing in their businesses through further diversification & additional sites, as well as continuing to grow trade through great hospitality, appealing to existing and new pub customers. These examples are representative of so many of our members and pubs across the UK, all facing the same challenges.
Through our professional support helplines we are seeing first-hand the distress many pub businesses are in as they look toward to the devastating tax increases ahead. Many have already made the decision to close their long-standing business, with communities losing long-standing, hugely valued pubs. You have an opportunity to prevent further unnecessary business failure through reversing your planned tax increases. These are small local businesses, created by and supporting working people and simply cannot shoulder further taxation.
Equally, in providing fair taxation for pubs, you can stimulate growth and unlock their full potential, creating skilled jobs in every community and restarting investment that will underpin regeneration in high streets, towns and villages. You will also protect a critical social hub, connecting communities, as well as a vital heritage asset, foundational for tourism in the UK. These essential, small local businesses are more than just a pub, they give many their first job opportunities, which can lead to vibrant career pathways, leveraging apprenticeships and professional development. These foundational community businesses support many local suppliers and small brewers, all whilst providing a real answer to social isolation and loneliness in a space that supports wellbeing and connects people with friends, family and strangers for many of life’s special moments.
You have a huge opportunity to save and invest in the great British pub, by cancelling the planned tax increases for pubs, before it is simply too late.
Yours sincerely,
Steve Alton
Chief Executive Officer
British Institute of Innkeeping (BII)
