The Sun reported the prices of meals like Sunday roasts and fish and chips were soaring, while The Times ran a piece saying profits had almost halved at the UKs top 100 restaurant groups.
So prices up, profits down.
Rocketing costs, partly driven by international issues, but also considerably driven by the previous administration’s fiscal choices at the last two Budgets, are forcing operators to make tough choices in order to stay afloat.
But even then, those increases they’re having to put through, it’s not enough to cover the increasing costs operators are facing, and profits are falling through the floor.
Strong campaigning
Businesses are falling like flies and the Government response, under the new Prime Minister (PM) Andy Burnham can be described as sluggish at best.
Despite strong campaigning on the part of industry for a VAT reduction, something the PM had said he was open to prior to taking the reins of power, the only indications of support so far from Mr Burnham has been paltry discounts on business rates from April next year (saving pubs around about £20 a week on average) and now yet further promises to reform rates valuations down the line in time for the next revaluation.
Now, don’t get me wrong, reform of business rates is not only long overdue, it’s badly needed.
The rates system has been punishing the pub sector unduly for the last few decades with it’s out-of-touch and opaque methods of valuation. Pubs have been punished for success for too long, so reform is most definitely welcome.
But unless our brave new Prime Minister does something a little more quickly, there won’t be many pubs left to benefit from the reform of the rates system.
Urgent action
The crisis is now, not in April 2027 or 2029, pubs need a fairer taxation policy now and the easiest lever that this Government can pull will be on VAT.
That said, the comments from Treasury minister James Murray in The Sun this week are not encouraging. He’s downplayed the possibility of a VAT cut, saying the move would “cost a lot of money”.
However, the Treasury needs to recognise that if you kill the Golden Goose of hospitality, you get nothing, and the current fiscal policy is doing just that.
Mr Burnham needs to act now, and not sit on his hands, fobbing everyone off with vague promises of support down the line.
We need action asap.
Oh, but in good news, if your pub does close because the Government has you over a tax barrel, Angela Rayner is working hard to ensure it can’t be converted into anything else.