Speaking at the MA Leaders conference in Norwich on 8 October, British Institute of Innkeeping (BII) boss Steve Alton said last year’s Budget demonstrated “a chronic lack of understanding” about the challenges faced by operators.
“The huge wage increases, National Insurance Contributions (NICs), particularly the threshold for part timers, plus business rates bills doubling; that pressure has meant operators have had no choice but to [reduce hours] and that’s led to lost jobs.”
He warned further tax hikes in this year’s Budget could see a third of pubs close their doors for good, as shown in a recent survey conducted by the BII.
Alton added just one in three pubs were currently profitable amid a “barrel wave of costs” including inflation, energy bills and rising wages.
“For every £3 spent [in pubs], a pound goes to the tax man. It is just chronically unfair and crazy,” he continued.
Choking growth
“Our members are working far too long hours and are seriously concerned about how they are going to pay the next payroll. If the pressure came off, they could grow their teams, grow their businesses and reinvest.
“[The Government] are choking growth, but the positive message to get across is that business rates is going to change, we just need to make sure it changes for the positive and [operators] see bills reduce. But I think there’s a lot of slip ups that could occur before we actually get that outcome.”
The BII boss also urged operators to lobby their MPs directly ahead of the autumn Budget next month: “What turns their head is when they get back to their home patch and suddenly there’s hundreds of letters in their mailbox about pubs, that matters.”
Addressing attendees in Norwich, UKHospitality chief executive Allen Simpson echoed the call for targeted support.
He said: “We have, I think, won the argument that last year’s Budget was asymmetric on our sector and socially regressive, but what we’ve not done yet is convert that into the fact this Budget needs to be asymmetrically positive for us.”
Simpson added while Chancellor Rachel Reeves faced “immense fiscal restraints”, hospitality should be seen as a driver of growth and opportunity in the upcoming Budget, which is set to take place on Wednesday 26 November.
The chief executive continued: “There’s an angel and a devil on the Government’s shoulder. The angel is, ‘if you want to create jobs and opportunities for people, you do that through hospitality’. The devil is, ‘we need to back sectors like fintech, medtech, and biotech, which are higher income per person employed’.
Political corner
“We have to get them to understand the benefits bill is going up and that means the position of the Government is fiscally getting worse.”
Simpson called for business rates reformation and reductions to NICs and VAT in the 2025 Budget. While the UKH boss shared little hope for success on NICs or VAT, the Treasury has previously confirmed it would introduce permanently lower rates for hospitality next month.
“We will see a positive outcome on business rates [in the Budget]. The question is how positive it is on NICs.
“Rachel Reeves has backed herself into a political corner about it,” he said.
“It’s never a happy position for a Chancellor to know the first thing their replacement will do is reverse all of their decisions, and that’s the case.
“Whoever comes in will say the NIC’s changes were socially regressive, they hammered lower earners worst and we’re going to change it; you can’t really survive in your position if you can predict in advance what your replacement will reverse to correct the mistakes you made.”
