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.”
