Britain's pubs are holding their breath ahead of Chancellor Rachel Reeves' Budget announcement on Wednesday, with publicans across the country fearing further financial pressure could force more beloved locals to call last orders for good.
A Perfect Storm of Rising Costs
After enduring Covid lockdowns, the cost of living crisis, and relentlessly squeezed margins, the hospitality industry says it cannot withstand another blow. The situation has already reached critical levels, with more than 400 pubs closing in 2024 alone. According to trade body UKHospitality, two venues are now shutting their doors every day across the UK.
Fiona Hornsby, who runs three pubs in Liverpool city centre, encapsulates the mood of dread. "We are absolutely dreading what will come next week. We are just terrified," she told The Independent. "It's not 'is it going to cost more?', it's 'how much?'."
Publicans are caught in an impossible position: absorb unsustainable costs or pass them on to customers who are also feeling the pinch. "You don't want to push those prices onto the customer," Hornsby explained, "but if you can't get two drinks for a tenner, then it's just wrong."
Pubs as 'Glorified Tax Collectors'
The industry partially blames successive governments for its malaise, pointing to policies from the last Budget that increased employer National Insurance contributions and cut business rate relief from 75% to 40%. For many, these measures were the final straw.
James Nye, Managing Director of Anglian Country Inns, which operates 10 pubs, stated that the rise in National Insurance compounded existing challenges. He described pubs as being taken "out of the frying pan into the fire on multiple occasions."
"We are glorified tax collectors as an industry," Nye revealed. "I think for every £1 I made in profit last year, I paid around £7 or £8 to the government." He emphasised that when prices rise, customers often believe publicans are benefiting, when in reality, a huge proportion is consumed by tax, leaving diminishing bottom lines.
This financial strain is felt from city centres to rural villages. James Wilson, general manager of The Pheasant in St Newlyn East, Cornwall, reported his pub had its busiest October on record but was left with a meagre £800 in profit.
A Make or Break Moment for Communities
Kate Nicholls, Chair of UKHospitality, has labelled the upcoming Budget "make or break" for the sector. She warns that the industry has "borne the brunt" of the last Budget, resulting in 13 consecutive months of falling employment and 170,000 fewer people on payroll.
The potential consequences extend far beyond balance sheets. James Nye believes the closure of pubs represents an irreversible change to the fabric of Britain. "The Great British pub is one of our national treasures... but I'd say it's harder now than it was going through Covid. At least in Covid we had support and we had awareness," he said.
The industry is calling for urgent government action, including:
- Lowering business rates
- Cutting VAT for hospitality
- Addressing the burden of National Insurance contributions
Fiona Hornsby issued a stark warning: "If there are any more cost increases, the doors will just close." With the nation's pubs awaiting the Chancellor's decision, the future of a British institution hangs in the balance.
