Jeremy Hunt's 2024 Budget could be 'life or death' for independent pubs - expert

05 March 2024 , 10:10

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A duty freeze on beer will mean 'bugger all for those running pubs', an industry expert has said (stock photo) (Image: Getty Images)

Tory Chancellor Jeremy Hunt could make or break businesses for landlords across the UK, an industry expert has warned.

The Chancellor will deliver his Spring Budget tomorrow - outlining the Government's tax and spending plans - and it has the potential to save hundreds of at-risk boozers from bankruptcy. The joint pressures of sky-rocketing energy bills as well as the long-term effects of Covid and Brexit have plagued the industry in recent years.

Last year, the Chancellor announced a new alcohol taxing system that would make alcoholic drinks below 8.5% ABV, such as beer and cider served on draught, cheaper. But the price of a pint has continued to rise, and the Office for National Statistics (ONS) said they were up 7.5% in January 2024 compared to the year before, despite the draught relief.

Ahead of the Budget, the Mirror spoke to Ed Bedington, editor of leading pub trade title The Morning Advertiser, about how it will affect British landlords and regular pubgoers. He warned how the Chancellor's changes could be detrimental to beloved independent pubs and explained the 'heartbreaking' reality as 'very good businesses' face shutting their doors.

Chancellor Jeremy Hunt will deliver his Budget tomorrow and it could be 'the difference between life and death' for small British pubs (Surrey Advertiser - Grahame Larter)

Ed explained: "If the Chancellor announces changes to VAT and business rates, it will potentially be the difference between life and death for smaller independent operators, and precious breathing room for an industry that really needs a chance to try and gather itself after several years of hammer blows and setbacks. The reality is that it's likely to result in only, at best, a duty freeze.

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"But even a reduction will mean little to pubs, as the benefits rarely translate down the chain and will be swallowed up by other increases." Ed predicts a duty freeze on beer which will mean "bugger all for those running pubs, who will find prices continuing to rise and have to explain to customers that - while the Prime Minister claims beer is getting cheaper - prices are still going up".

When asked if the UK pub trade is dying, Ed responded: "This is a really challenging time and there will be a lot of businesses that don't survive the current crisis - and some of those are very good businesses that wouldn't have gone under in normal circumstances. It's heartbreaking. But will the entire trade die? No. It will be changed though - for better or worse, time will tell."

Ed continued: "The smaller, independent, entrepreneurial operators that we all love are probably more exposed and those may be the ones that don't make it through - and that will be a major loss to the eco-system, excitement and innovation in the sector." He explained that the industry needs "sensible support from the Government" to allow pubs to "trade their way out of trouble".

The price of a pint in the UK has continued to rise in recent months, despite the Chancellor's draught relief announced in August 2023 (stock photo) (Getty Images)

Ed predicts hospitality alcohol and food prices will rise again this year. "We're already seeing the price rises from breweries who have to justify their own spiraling costs of production and - unless there's a magic wand to take away inflationary pressures - there's going to be little option for most operators than to increase prices to the consumer on beer and food," he explained.

While a duty freeze is welcomed by brewers, Ed said that it doesn't achieve a lot for the staff behind the bar. Instead, to save many of the pubs at crisis point, Ed believes the Chancellor needs to announce a reduction in VAT and continued support on business rates. He said: "The Government did a great job during the pandemic by offering support in the form of grants and VAT.

"Since then, they've maintained business rates discounts, but the reality is, that needs to not only be maintained, but the whole system has to be reformed to give pubs a fairer crack of the whip." Ed said a VAT reduction would achieve "meaningful change across the sector - unlike duty freeze". He added that another lifeline factor would be reducing interest rates.

"A lot of good businesses have had to take out loans during Covid, when interest rates were low. This isn't now the case and those businesses are facing crippling repayment costs plus extortionate energy contracts, and it's very difficult to see a way out," Ed explained. The Chancellor will deliver his Spring Budget around 12.30pm on Wednesday, March 6.

Are you a landlord struggling to stay in business? Get in touch. Email [email protected].

Nia Dalton