Greene King has published a report, “Growth on Tap: Reforming Business Rates to revive the pub sector”, which lays bare the growing financial challenges pubs are facing, and makes a number of policy proposals around business rates which could help mitigate some of the impact of increases, such as national insurance contributions and living wage rises.
Ahead of the Autumn Budget, the company is calling for an achievable overhaul in the business rates system, which would have a big impact for the pub and bar sector as a whole.
The report has highlighted how a lower business rates multiplier for all pubs, delivered in the Budget, giving operators a 20p discount on current rates, would deliver immediate relief across the sector.
Unlocking investment
For Greene King alone, the move would unlock £13.7m in savings which could allow them to create 3,250 level 2 apprenticeship positions, or invest in 60 Pub Partner sites to drive growth.
Greene King CEO Nick Mackenzie said: “They could do this tomorrow, or within the constraints of their budget round, but they could do it, quickly and effectively. And it’ll impact on both small and large businesses.
“I’m saying this now is this is the one that they can do quickly. This is the one they can do effectively and this is the one they have said they will look at. Therefore there’s three really, really good reasons for them to do this.”
What is the report calling for?
The report calls on the Chancellor and Government to:
- Use existing power at the Budget to introduce the largest possible multiplier discount for pubs - 20p on their current multiplier.
- Use it's commitment to reform business rates to switch the 2026 revaluation so a pub's valuation is calculated on profit, not turnover.
- Making permanent the lower business rates multiplier for all pubs, to recognise the unique role they play in communities.
- Maintain the current three-year window for processing appeals.
- Strengthen improvement relief to include all enhancements, applied at property level and an extended timeframe of relief. At the moment, the scheme delays business rates increases for one year after certain property upgrades. But it only covers structural changes and requires the same tenant throughout the works and for a year after - a major barrier in a sector with frequent turnover. To work for pubs, it should apply to all value-adding improvements and be tied to the property not the tenant.
On top of the discount, Greene King is also calling for reform of the system to ensure rates are calculated on a pub’s profits, rather than its turnover, which for the pubco would enable them to benefit from a further £20m a year.
Mackenzie said: “We might be driving good revenue in some of these businesses, but the profitability has completely changed, and therefore it’s not fair to be measuring pubs in that way.”
Investment penalisation
Other recommendations included in the report were to make permanent the lower business rates multiplier for all pubs, to maintain the current three-year window for processing appeals and to strengthen improvement relief to support pubs investing and not being penalised for non-structural improvements.
Mackenzie added: “The Government has made growth its number one priority, and the Chancellor now has the opportunity to make changes that will immediately unlock millions of pounds to do just this. We will be able to go even further and faster with our investments – creating new jobs, refurbishing pubs and breathing life back into communities up and down the country.
What would a 20p discount mean to Greene King?
- The discount would equate to a saving of around £10,000 per pub
- Would enable an additional 1.1 million hours of work per year, providing employment opportunities in Greene King pubs across the UK
- It could create 3,250 Level 2 apprenticeship positions, supporting careers within the hospitality sector
- Allow 30 pub investments in Greene King’s managed estate, driving economic growth at a local level
- Allow 60 Pub Partner investment projects, helping grow small business and creating social spaces in communities across the country
“While we welcome the commitment for long-term reform, this now needs to happen to ensure the system is fair and fit for the future, rather than stuck in the past.”
The report, which can be accessed here, also includes case studies from operators to bring to life the challenges and struggles they are facing.
Costs are ‘never-ending’
One of the operators featured, Chris Windle of My Yorkshire Pubs, said: “The cost rises are never-ending. The job of operating a multi-site pub business has got a lot harder with increasing costs. The reduction in business rates relief this year has had a massive impact and every bottom line is either stretched or being reduced. We need the Chancellor to act to ease the pressure on pubs and believe that these reforms to business rates are the first step in achieving this.”
Emma McClarkin, CEO of the British Beer & Pub Association, said: “This report lays bare the financial struggles pubs and brewers are enduring thanks to policies which stifle growth and undermine investment, jobs, and vital community spaces.
“It has never been more urgent for [the] Government to overhaul the outdated and unfair business rates system as our sector, which makes huge economic contributions and has priceless cultural value, is one of the most highly taxed industries in the UK.
“These real stories should make [the] Government and policy makers sit up and face the reality that unless they act now, they could oversee irreversible damage to our beloved pubs and brewers.”