British pubs will close down at the rate of one a day this year, the industry’s trade body has warned, blaming high business taxes. At the same time, the hospitality sector has called on ministers to tackle “eye-watering” costs.
The British Beer and Pub Association (BBPA), which represents more than 20,000 pubs in the UK, said it expects 378 to close this year in England, Scotland and Wales, at a cost of 5,600 jobs.
This would mark an increase on last year’s 350 closures, continuing a long-term trend that has made more than 15,000 pubs call last orders once and for all since 2000.
The BBPA singled out business rates as one of the hardest costs for the industry to bear, but said that it was “not too late” for the government to reform the tax.
Business rates are based on a property’s “rateable value”, an estimate by the Valuation Office Agency of how much it would cost to rent the premises.
Pubs’ business rates tend to be disproportionately high in relation to their financial viability because pubs often occupy high-value buildings, while being run on very tight profit margins.
The BBPA also highlighted other costs affecting the UK’s 45,000 pubs, including beer duty and VAT, which it said meant £1 in every £4 spent on beer went directly to the Treasury.
Establishments have also been hit by the government’s decision to increase employers’ national insurance contributions (NICs), and new waste disposal rules that the BBPA says effectively double-charge pubs for glass bottle recycling.
These extended producer responsibility (EPR) obligations cost the sector an additional £60m a year, according to BBPA estimates.
Emma McClarkin, the chief executive of the BBPA, said: “Pubs are trading well but most of the money that goes into the till goes straight back out in bills and taxes. For many it’s impossible to make a profit, which all too often leads to pubs turning off the lights for the last time.
“However, it’s not too late to change this sad state of affairs. We know government recognises the economic and social value of pubs and we’re not asking for special treatment, we just want the sector’s rich potential unleashed.
“We’re calling on government to proceed with meaningful business rates reform, mitigate these eye-watering new employment and EPR costs, and cut beer duty.”
Separately, in a select committee hearing on Wednesday, hospitality bosses also raised concerns about soaring energy costs.
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David Wigham, the commercial director of Admiral Taverns, which runs more than 1,600 pubs in the UK, said energy costs were still up to double the level before the energy crisis unleashed by Russia’s invasion of Ukraine.
Paul Wilson, the policy director for the Federation of Small Businesses, said hospitality was particularly vulnerable to high energy bills due to customers’ resistance to higher prices; low levels of energy efficiency across the sector; and a lack of cash reserves after the Covid pandemic.
The BBPA has previously advocated for capping the sector’s energy bills during periods of high prices.
While pubs have struggled with long-term cost pressures, recent warm weather has lured more drinkers to the beer garden, according to the pub chain Young’s.
On Wednesday, it reported 7% sales growth at established sites for the first 14 weeks of its financial year, as a warm spring and early summer helped support demand.
“We remain confident about the year ahead, despite the well-publicised challenges faced by our industry,” the company said.
Young’s, which operates mostly in the south of England, previously forecast an £11m rise in its annual costs after increases to the minimum wage and employer’s NICs.
