Rachel Reeves must act now to save pubs, City broker warns
Peel Hunt has become the latest broker to issue a warning that British pub culture is at risk due to structural pressures and tax hikes.
Hospitality was the biggest driver of economic growth in both November and December, according to the latest government figures.
But tax rises in the October budget “halted and reversed a year-long upgrade cycle”, Peel Hunt said, with increases to employers national insurance and the minimum wage expected to vastly increase cost pressures.
“Consumer demand is there, however, profits are being wiped out with sky high bills and pubs are facing yet more rates and costs come April,” Emma McClarkin, chief executive of the BBPA, said.
UKHospitality has similarly said that the industry’s growth is “something the government should be backing” but “instead it is stunting the sector’s potential by inflicting such damaging costs on businesses”.
“Driving growth is rightly the national priority and hospitality can be the vehicle, if the government rethinks its regressive changes to employers’ national insurance contributions.”
Retail and hospitality bosses have campaigned to reverse or postpone the change to NICs, although this is “very unlikely to succeed”, Peel Hunt said. But the broker added that the campaign may “make the Chancellor think twice next time”.
‘Every generation needs pub life’
The warnings come as chair of the Night Time Industries Association (NTIA), Sacha Lord, cautioned that the UK is at risk of an epidemic of loneliness due to pub closures.
“For thousands of elderly and isolated individuals, their local is a vital source of companionship and community. And I’d argue that every generation needs pub life.”
“I told [Rachel Reeves] to act before irreversible damage is done, and urged her to give pubs a fighting chance – not even to thrive, but simply to survive,” Lord said.
Just under 300 pubs served last orders for a final time in 2024 in England and Wales, according to the BPPA.
Tax rises have been compounded by structural changes and low disposable income, which has seen Brits drinking less in pubs and more at home.
The share of out-of-home alcohol sales (alcohol bought at a pub or restaurant), fell to 43.4 per cent 2024, according to Peel Hunt.
This figure has been steadily falling for the last twenty years, and is currently around 10 per cent below its pre-pandemic 2019 level.
“Even now, in the build-up to the spring Budget, we’re witnessing job losses, venue closures and stalled expansion plans. I’m no economist, but even I know that this isn’t the way to secure growth,” Lord added.