Up and down the country, pubs will be playing host to discussions on how the Budget improves patrons’ and licensees’ lives, and the conclusion will be: not much, if at all.
Grocery costs remain high, mortgages and rents remain high, energy remains high. However, if their local is still open, well, they are the lucky ones. If it’s an independent venue, they are very lucky.
Business in the 21st century wasn’t meant to be this hard. But increases in employers’ National Insurance contributions in the last Budget mean many operators are working with smaller workforces, and operating on thinner margins because of increased ingredient and supplies costs.
“I will support the Great British pub through our new national licensing framework, encouraging councils to back our pubs and to back late-night venues with greater freedoms,” said chancellor Rachel Reeves in Parliament.
“For business rates, I will reduce permanently lower tax rates for more 750,000 retail, hospitality, and leisure properties, the lowest rates since 1991, paid for through higher rates on properties worth more than £500,000, like the warehouses used by online giants.”
The chancellor also announced that alcohol duty will rise in line with the retail price index (RPI). Tobacco duty goes up by two percentage points above RPI.
But are business rates actually being cut? Not really, says the British Institute of Innkeeping (BII). The current 40% relief is being removed from April and replaced with a new multiplier which, says the BII, will actually increase bills for the majority of pubs. It estimates that this, combined with rising staff costs, and increases in alcohol duty, will make it even harder for pubs to operate profitably.
“Words cannot express how devastating this budget is for so many of our members,” said chief executive Steve Alton.
“Award-winning operators, working tirelessly in their local businesses to deliver a brilliant and essential service to their communities, will now face thousands of pounds in increased taxes — and the hard truth is that many of them just will not be able to sustain their businesses come April next year.
“These measures will inevitably force many venues to reduce hours, cut investment, and, most worryingly, cut jobs, with young people set to be hit the hardest.
“Pubs are one of the UK’s biggest employers of 18– to 25-year-olds, offering vital first jobs, training, and career opportunities. Today’s Budget threatens these essential employment opportunities in every community.”
A similar point was made by John Webber, head of business rates at Colliers, who said: “Together with rises anticipated in the 2026 revaluation, matters have been made even more costly for businesses, who overall will be facing higher business rates bills next April as business rates are set to rise from £33.6 billion to £37.1 billion — a 10.2% increase.
“This is despite pre-election promises of business rates reform and ‘saving the high street’.”
Webber added: “Listening to the chancellor today has done little to allay my concerns for businesses in the difficult economic period ahead. The government’s business rates ‘reforms’ are merely tinkering around the edges and will provide limited benefit- merely making the system more complicated.
“Proper longer-term business rates reform or a concerted effort to reduce the multiplier to 35p in the pound — something that everyone can afford — seems to have gone out of the window.”
From Champa Magesh, Managing Director of Access Hospitality, a stark example of how the Budget will affect licensees:
“With businesses making 13p profit from a single pint, if every hospitality business tried to recoup the additional wage cost through selling pints alone, they would need to sell an additional 29.5 million pints a day to absorb the increase in costs.”
Kate Nicholls, chair of UKHospitality, said: “Wage rises, holiday taxes, and monumental increases in rateable values have put even further pressure on hospitality businesses, as a result of this Budget.
“A 5p business rates discount is simply not enough to offset these costs and redress the damage it will do to business viability and job opportunities. This is exactly why we called for the government to use the maximum possible discount it had the power to implement, which could have genuinely delivered lower business rates.
“Instead, we have a situation where hospitality businesses are checking their wage bills and rateable values, and their hearts are sinking at the eye-watering increases before them. Once again, the government is trying to balance the books disproportionately on the backs of the high street, and risks creating a two-tier economy.”
Simon Dodd, chief executive of Young’s, said: “Our teams sit right at the heart of every Young’s pub, and we are proud to back fair pay, but these wage increases land another £1.4bn blow to our sector, adding to the significant pressure we are already grappling with.
“The government has not gone far enough to tackle the other unfair costs weighing down pubs and has added more pressure with the rise in alcohol duty, so it will continue to be challenging for pubs to keep rewarding our people and keep doors open. As a result, it will just get harder for young people to find jobs in an industry that’s always been a major employer for them.”
Politicians have always told us how much pubs mean to them, yet are taking little action to help the nation’s vital community hubs.
Chris Jowsey, chief executive at Admiral Taverns, speaks for many when he says: “This was the chancellor’s opportunity to take meaningful action in order to drive growth and encourage investment into the hospitality industry. A sector which employs over one million people and contributes more than £34 billion each year to the UK economy, yet remains one of the most heavily taxed in the country.
“Licensees and operators across the UK have been working incredibly hard to sustain community pubs, continuing to show real resilience, despite the relentless headwinds.
“However, the reality of today’s budget is that Reeves has placed an even bigger burden on the shoulders of community pubs, posing further risk to our industry, threatening both jobs and the viability of our beloved pubs across the country.”
Andy Slee, chief executive of SIBA, said: “Today’s Budget is a bitter blow for beer drinkers, community pubs, and small breweries. Instead of supporting a sector already under immense pressure, the chancellor has chosen to increase beer duty on top of a raft of other tax rises.
“She had a real opportunity to build on last year’s progress by extending draught relief — a move that would have ensured beer sold in pubs carried a lower rate of duty — but she chose not to act.
“It was, however, positive to see the chancellor narrow the disparity in tax paid by online gambling businesses compared to high-street and hospitality businesses, something which SIBA has sought to see government address.”
Steve Cox, chief executive of the Keystone Brewing Group, said: “Today’s Budget offers some acknowledgement of the pressures facing hospitality through the commitment to permanently lower business rates, but for breweries the reality is far more challenging.
“Rising wage costs, frozen tax thresholds until 2031, and continued uncertainty around alcohol duty all tighten the squeeze on margins that are already razor-thin across the sector.
“There remains no targeted support for breweries on energy, duty, production costs or skills, and without that, the package announced today falls short of what producers urgently need.
“The wider signals from the OBR, including downgraded growth forecasts and stubborn inflation, only add to the concern. For most breweries, this Budget does little to shift us out of a holding pattern.”
North of the border, Scottish Beer & Pub Association president, Andrew Lawrence, said the Budget did very little to help Scotland’s publicans and brewers.
“The sector is already struggling under the strain of high taxes, cost increases, and the cost-of-living crisis impacting on consumer spending habits,” he said.
“The changes to business rates in England also mean that without some form of relief in the Scottish Government’s January budget, Scots pubs will continue to face a heavier rates burden that their English counterparts.” He called upon the Scottish government to correct this imbalance.
Greg Mulholland, campaign director for the Campaign for Pubs, said: “This is a deeply disappointing budget that does nothing to address the crisis facing the UK’s world-famous pubs.
“There’s some limited support for some pubs in England through business rates, but no support whatsoever for pubs in Scotland, Wales, and Northern Ireland. Altogether, this budget will mean yet more job cuts in pubs and more publicans unable to make a living.”
Vice-chair, Dawn Hopkins, added:
“Week after week, eight more pubs vanish for good, taking with them people’s livelihoods, community spaces and vital local jobs. Yet the Chancellor has chosen to look the other way.
“Publicans and pub lovers have been crystal clear about what support is needed, but we have been ignored. Instead there are no measures to address the disastrous hike in costs in last year’s budget and an additional hike in costs though wage increases.
“Only the already announced reform of business rates, which will provide only a little help for some pubs in England but nothing for all other pubs.”
