The British Institute of Innkeeping (BII) has reacted to the Chancellor, Rachel Reeves’ first budget today.
The Chancellor announced she will continue the business rates relief from April 2025 for hospitality venues, but at a lower rate of 40% instead of the current 75%. With only 1-in-4 businesses currently profitable, this additional cost will severely impact huge numbers of pubs across the sector, leaving them facing difficult decisions on whether they will be able to continue trading.
Whilst the announcement of a full reform of the business rates system in 26/27, with permanently lower rates to rebalance the tax regime, is welcome, it is long overdue and does not protect our pubs in the meantime.
In addition, the increase in employer National Insurance contributions and the National Minimum Wage from April 2025, will have a huge impact on their profitability and threaten their existence.
A recent survey of BII, BBPA and UKHospitality members revealed that without the continued rates relief level, over half would be forced to reduce their staffing levels, meaning fewer hours for team members, or the loss of jobs altogether. The survey also revealed that over half would cancel any planned investment, stunting growth in the economy, alongside the impact on local employment levels.
BII members, running a diverse range of pub businesses, supporting local people, local employment, local suppliers, charities and entire communities, will face yet further cost challenges. For many, alongside the huge inflationary costs of food & drink, energy and staffing over the past few years, they will have no choice but to take drastic measures to protect their livelihoods.
BII CEO, Steve Alton, commented:
“These are businesses at the heart of their communities, who have invested heavily since the pandemic in their pubs, making them safe, welcoming spaces, open to all. As we head towards the festive period, they will continue to ensure their customers can connect with friends, family and their wider community, but the quieter winter months will be incredibly tough, especially with lower rate relief of 40% on business rates, as well as increased employment costs.
“We will continue to make the case for more support, alongside our members taking their challenges directly to their local MPs. This support needs to be an actual reduction in the unfair level of tax our pubs pay with a priority on a specific VAT reduction for pubs, as well as a full and urgent business rate reform, as a recognition of their vital role in connecting communities, providing local employment and supporting a host of other local businesses.
“Without this investment in their futures, we stand to lose many more of these unique and essential community hubs.”
Following the BII’s reaction to the Chancellor’s first budget today, key BII members have shared their reactions, and thoughts on what the budget will mean for their essential pub businesses.
BII Licensee of the Year 2024 winner, Justine Lorriman, Owner and free trader,
The Royal Dyche, Burnley
“I feel the Chancellors quote ‘a penny off a pint’ is a compete insult to the hospitality industry. The sector has just been hit with so many increases, and seeing the house cheer when this was announced, shows just how out of touch they are.
“As for the reduced Business Rate Relief from 75% to 40% – this will cost many pubs thousands of pounds. The National Living Wage and NI increasing for employers was expected, but not on the scale that it has been increased to.
“It will be a waiting game now to see how much packaged and spirits increase from breweries and wholesalers with the duty increasing on non-draft products.
“Disappointing to say the least!”
BII (NITAs) winner, BII Ambassador, Mark Holden, Owner,
Inn Cornwall
“As a small pub group owner, I’ve just done some quick calculations on what the budget means for us. The business rates increase from April will be £33.5k a year, but the larger impact for us is the lowering of Employer NI to £5k. This lifts 40% more of our team into contributions.
“IF current employer NI age levels and categories stay the same (which we are unclear of) then we are looking at a £41,294 a year increase. In total nearly £75k more for our small business to find, at a time where we are struggling for profitability anyway.
“I am concerned many jobs will be lost across the sector.”
BII Ambassador, Emma Gibbon, Owner
Inndulge
“There is no doubt that the rise in Living and Minimum wage, along with increasing employer NI contributions will put extra stress on our already fragile hospitality sector. These 2 increases alone, we estimate will cost each of our pubs around 18k per year.
“We have no wiggle room left as we are still paying off covid debt and reeling from the food and energy inflation of the past few years. Without any further support or mitigation to help cover these costs, I fear many will close for good.
“Unfortunately, this budget has again had a disproportionate effect on hospitality businesses, and we will all be facing tough choices over the next year with those who are left having to cut staff hours and raise prices, leaving little or no room for investment.
“We didn’t feel things could be any worse under a new government than the previous, sadly we may be wrong.”
BII Ambassador, Matt Todd, Owner and free trader,
The Wonston Arms, Wonston
“I see nothing in here that helps me grow my pub business.
“I’m not sure customers will be flocking to Pubs to reap the benefit of a 1p cheaper pint … assuming we see it arrive to us in our buying prices.”
BII Ambassador, Sam Hagger, Founder,
The Beautiful Pubs Collective
“After two years of striving to bring our pubs back to profitability and preparing our business for its next phase of growth, today’s budget presents yet another significant challenge for us.
“We fully support the need to increase wages for our youngest team members, but we believe this should be achieved through training and development to build a sustainable, skills-based workforce that benefits everyone in the future. Today’s announcement will put enormous pressure on a sector that contributes far more than the government acknowledges and will ultimately lead to price inflation, prompting guests to reconsider how often they can support their favorite hospitality businesses.
BII CEO, Steve Alton, commented:
“Our members represent a diverse range of business models within the pub sector, from drinks only pubs, through to food focused operators, all of whom serve their communities, offering a warm welcome and the opportunity for people to come together. They facilitate celebrations, commiserations, offering kindness and community spirit.
“It is imperative that we protect these unique and essential hubs of our communities, and the fantastic people who make them so special. They need a fair and level playing field to give them the chance to do what they do best – connecting us, offering accessible careers, supporting local suppliers and providing a feeling you can only get in the Great British Pub.
“These are not online giants, they are small businesses, that can provide growth and employment in every community, but they need the investment they deserve to thrive in our towns, cities and high streets across the UK.
“This budget quite simply will have a far-reaching effect on their teams and their businesses, and the Government must recognise that they have left our sector, full of entrepreneurial, hardworking people, fighting for the survival of their pubs.”
Notes to the editor:
About the British Institute of Innkeeping:
The BII is the leading independent licensee support organisation for individuals working in hospitality, with 13,000 individual members running premises across the UK – predominantly tenanted, leased, managed and freehold pubs. The organisation provides expert helplines, online business support, and guidance on key industry issues, and savings on a range of supply deals for its members, keeping pubs thriving in the heart of every community.
For further information please contact:
Molly Davis Head of Communications
Email: molly.davis@bii.org Mob: 07539 377752
Notes to the editor:
About the British Institute of Innkeeping:
The BII is the leading independent licensee support organisation for individuals working in hospitality, with 13,000 individual members running premises across the UK – predominantly tenanted, leased, managed and freehold pubs. The organisation provides expert helplines, online business support, and guidance on key industry issues, and savings on a range of supply deals for its members, keeping pubs thriving in the heart of every community.
For further information please contact:
Molly Davis Head of Communications
Email: molly.davis@bii.org Mob: 07539 377752
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