Speaking to LBC earlier this week, the Prime Minister said discussions with hospitality were ongoing and signalled openness to measures such as licensing freedoms, while acknowledging that some businesses would see higher bills following the latest revaluation.
However, operators across the pub sector said the focus on support misses the point, with many arguing that pubs are already among the country’s largest contributors to the Exchequer and are instead calling for fundamental tax reform.
‘We want fairness’
Tim Martin, founder and chair of JD Wetherspoon, said the Prime Minister’s language was misleading. “It’s inaccurate of the PM to talk of the government providing ‘support’ for the licensed trade. It’s the reverse of reality. Pubs support the government,” he said.
Martin said Wetherspoon, its staff and customers pay around £1bn a year in taxes, equivalent to around 40% of sales. “That amounts to over £10 of tax for £1 of profit. We don’t want ‘support’. We want fairness: tax equality with supermarkets. The same VAT and the same business rates per pint.”
He added that pub companies and directors needed to campaign more aggressively for tax equality.
Concerns were echoed by managed and leased pub operators, who warned that the latest revaluation had already neutralised the benefit of the lower rates multiplier announced in the Autumn Budget.
Andy Spencer, chief executive of Punch Pubs & Co, said business rates were now the single biggest threat facing community pubs.
“It’s encouraging to hear the Government acknowledge the pressure pubs are under, but warm words alone won’t be enough. Business rates are currently the single biggest threat to the viability of community pubs across the UK, with the latest revaluation increases wiping out any benefit from the reduced rates multiplier.”
Spencer called for the immediate introduction of pub specific rates relief alongside a fairer long term valuation system, warning that without intervention operators would be forced to scale back investment, job creation and community support.
Chris Jowsey, CEO of Admiral Taverns, added that the revaluation had created “an exponential increase in tax bills” for many community pubs, warning that more than 400 sites in the group’s 800 strong estate now face steep rises after previously paying no rates at all. He said some licensees were seeing increases of more than 280%.
“The current system penalises growth and investment,” he added, calling for immediate rates relief to protect the long term viability of community pubs.
Star Pubs MD Lawson Mountstevens said the solution was straightforward and long overdue.
Pub specific discount
“We are ready and willing to speak to the Government on this. The ongoing solution is simple: a pub specific discount on rates bills,” he said. “This would relieve a huge amount of pressure on vital community hubs and help deliver a fairer settlement for high street businesses.”
Operators also highlighted the combined impact of rates revaluation and rising labour costs.
Brucan Pubs’ director James Lyon-Shaw said many pubs were facing increases of between 70% and 160% in rateable values, with tapering measures offering little protection.
“When combined with further increases to the national living wage, we are looking at a £100k dent in our P&Ls once again,” he said. “There are no more efficiencies to find. Every lever has already been pulled.”
Lyon-Shaw called for an urgent impact assessment of the proposed changes before the end of February and warned that licensing concessions would be meaningless if businesses were “taxed to death”.
Similar frustration was voiced by regional brewers.
‘It’s not right’
Managing director of JW Lees Brewery, William Lees-Jones, said licensing reform would not compensate for the scale of rates increases announced.
“No amount of sorting out licensing legislation is going to make up for the crazy amounts of business rates increases that were announced through the revaluations,” he said. “It’s not right to say pubs will pay less rates only for them to end up paying considerably more.”
Meanwhile, operators involved in the growing campaign to bar Labour MPs from pubs said their demands were being mischaracterised.
Dorset operator Andy Lennox said the industry had “no interest in licensing concessions”, arguing that the only meaningful intervention would be a VAT cut and deeper rates relief.
“The only support that is acceptable is a VAT cut to 13% in line with Europe,” he said, adding that the planned rates discount for April should be significantly higher than currently proposed.
The prospect of a reformed system from next year has done little to ease concerns.
Operators stressed that unless the new framework materially reduces pressures in the short term, the gap between political commitments and operational reality will continue to widen for pubs already struggling with steep cost inflation.
