‘A tax burden without precedent in the 21st Century’: Pub chain McMullen’s blasts government tax hikes
One of Britain’s biggest pub chains has taken aim at the government’s “damaging” tax hikes, warning they will lead to lower demand and investment and have forced the hospitality sector to “bear the brunt” of rises in government spending.
Hertford-based McMullen’s, which operates around 120 pubs in London and the home counties, including the Old Bank of England on Fleet Street, the Horse and Guardsman on Whitehall and the Lock Tavern in Camden, said there was a “fundamental tension” between rising costs for businesses and the government’s expectation of growth.
Outgoing chairman Charles Brims said the Autumn budget brought about “a tax and cost burden without precedent in the 21st Century” with larger employers “particularly hard hit.”
“While the government’s first of five ‘missions’ is to ‘kickstart economic growth’, it remains far from clear how this is to be achieved, particularly in our sector,” Brims said in a statement.
“There is a fundamental tension between adding cost to businesses, particularly in relation to tax and labour, and then expecting businesses to grow in such an environment.
“To the extent that businesses absorb the costs, available cash for investment in growth will decline. To the extent that businesses pass on the cost to consumers, real disposable incomes will decline and thus depress the demand that businesses ultimately rely on to grow.”
The firm added that the Autumn Budget tax rises “will create additional challenges at several levels in our business.”
Hikes to hospitality costs
The remarks add McMullen’s to a growing number of pub and restaurant chains who have warned over the pain of rising labour and business costs introduced in the Autumn budget.
This included a hike to National Insurance rates and thresholds, as well as a rising minimum wage and a reduction in business rate relief.
Chancellor Rachel Reeves is expected to raise taxes by at least another £10bn in this year’s Autumn Budget, City analysts have warned.
McMullens also said the plan to part-remove business property relief against inheritance tax “risks being materially self-defeating for the treasury and damaging” to the company.
“The hospitality sector, having borne the brunt of public health demands during the pandemic, is now bearing the brunt of the public finance demands,” the firm said.
McMullen’s sees strong profits
It comes as family-owned McMullen’s posted a jump in profits for 2024, returning them to pre-pandemic levels for the first time.
The results for the year to end September – prior to the Autumn budget – saw pre-tax profits rise 34.4 per cent to £16.4m, while turnover rose 8 per cent to £122.7m.
The 198-year-old business said its bigger London sites saw strong sales driven by recent investments, including the Old Bank of England, which saw its turnover rise more than 30 per cent during the year.
McMullen’s said underlying demand challenges were “shaded” by rises in food and drink prices, while customer disposable income remained “vulnerable.”
The company’s brewing division, which includes the original McMullen AK, McMullen Country Best Bitter and McMullen IPA, saw own-brew dispatched volumes fall by 5 per cent over the period.