Greene King's finance chief has warned that spiralling taxes and rising employment costs have pushed the UK's hospitality sector to “breaking point”, as the industry braces for next week's Budget.
Jonathan Fearn, finance chief of the privately-owned pub chain, said decisions taken by the Labour government have “created a cocktail of costs, which have made it ever harder for a pub to run its business.”
Cost Pressures Mount
Writing in This Is Money, Fearn called on the Chancellor to act on a range of escalating costs, including business rates, national insurance and VAT. He said inflation has added £400m to the pub company's business costs since 2019, with hourly wages climbing by more than 60 per cent and electricity, gas and water bills surging by half.
Greene King's total business rates bill stands at £60m annually across its 1,500 pubs, Fearn said, citing research by the British Beer and Pub Association which revealed that a pub earns just 12p profit from every pint sold.
Government Measures Under Scrutiny
Fearn welcomed Andy Burnham's decision to cut business rates for pubs by 20 per cent, one of the Prime Minister's first acts after entering Downing Street. However, he argued that this measure, estimated to save each pub around £1,100, “pales in comparison” to other cost pressures and “will almost certainly be cancelled out” by accelerating wage inflation.
The Greene King chief urged Healey to tackle the youth unemployment crisis, which he said “is particularly painful for an industry that has traditionally provided that vital first step into work”. Hospitality and retail bosses have been pressing the Chancellor to reverse some of the increases to employer national insurance contributions introduced by his predecessor, Rachel Reeves.
VAT Reduction Campaign
Fearn called on Healey to reduce value-added tax on the hospitality sector from 20 to 10 per cent. Greene King, alongside other pub operators including JD Wetherspoon, has backed a campaign spearheaded by celebrity chef Tom Kerridge, which argues that the industry's VAT burden is disproportionately heavy compared to neighbouring European nations.
Fearn said: “Britain has been stuck at its 20 per cent rate for years, but the cumulative impact of rising costs means the industry is reaching breaking point.”
“It has been hugely encouraging to see the Prime Minister back the nation's pubs, but if he is to truly be a champion for pubs, he needs his Chancellor to back him with action at the Budget to start reducing our costs and give pubs the breathing space we need to invest, employ and grow.”
