A flash survey undertaken by the British Institute of Innkeeping (BII) in the wake of the Budget shows the devastating impact of broken promises destroying the pub sector.
BII chief executive, Steve Alton
BII members revealed that only one in three are currently profitable, due in the main to the previous budget in October 2024, which delivered huge increases in employer National Insurance contributions, the minimum wage, and the doubling of business rates bills as the relief was slashed to 40%.
Despite promises from the chancellor that she would be supporting pubs by reforming the outdated and unfair business rates system, and delivering permanently lower rates bills, pubs have instead seen huge rises in the bills they will have to pay from April 2026.
The results are stark — if they don’t make tough decisions around staffing levels, opening hours, and reducing the services they offer to their customers, fewer than one in 10 will be profitable in April next year.
Pubs have been given only a 5p discount off the standard multiplier rate used to calculate business rate bills, and alongside the removal of the 40% relief, which was designed to be a safety blanket until business rates reform was delivered, and the huge increases in rateable values following the revaluation, they have been left with thousands more to pay from April.
The survey further revealed that publicans will have to counter the additional rises in national minimum wage (up 8.5% to £10.85ph) and national living wage (up 4.1% up to £12.71ph), alcohol duty (up nearly 4%), and the huge rise in business rates bills, with a combination of cost cutting measures.
- 90% will increase drinks prices;
- 80% will cut staff hours;
- 71% will increase food prices;
- 41% will cut services offered in the pub, such as food;
- 45% will cut opening hours; and
- 42% will make staff redundant.
“We have spent more than a year giving evidence to government about the huge impact the 2024 budget had on pubs, pushing them to the brink, with ever-increasing taxation on employment and the properties they occupy,” said Steve Alton, chief executive of the BII.
“We have been crystal clear that our pubs are not failing businesses, but that government policy and over-taxation is holding back their full potential.
“Fair taxes unlock investment, skilled employment opportunities, and growth in every community. Instead, these further, unfair taxes are devastating viable small pub businesses, threatening their future and that of all the people who rely upon them.
“I wrote to the chancellor on Monday on behalf of our members, who feel betrayed and devastated following her announcement last week, and the subsequent release of the business rates revaluation figures.
“Our members’ priorities for the support they need and deserve have not changed: reduce the unfair and unsustainable levels of tax on their businesses, with a reduction in VAT to match our European counterparts; a full reform of the business rate system, rebalancing it with the digital economy; and a reversal of the huge rise in costs around employing people in local communities.”
Ripping the heart out of communities
He added: “Despite her promises on BBC Breakfast at the end of September to reassure our members that her budget would be ‘giving a break… to businesses that operate out of local communities, like pubs’ through a fundamental reform of our business rates system, she has instead added thousands of pounds to the cost of running a pub and providing vital employment opportunities to young people, particularly those looking for their first job.
“The prime minister stated that ‘Pubs… are the beating heart of our communities. When our locals do well, our economy does, too.’ This budget has ripped the heart out of those communities.
“We need government to urgently reverse their decision on taxing our pubs out of existence and deliver meaningful change to the unsustainable levels of tax they already face, before it is too late. We also need all pubs and their customers to write to their MPs via the ‘Our Pub’ campaign, calling for the support they urgently need.”
Read Steve’s letter to the Chancellor here. Get involved with the Our Pub campaign here.
