We're just tax-collectors, say pub landlords asking for help

A campaign to save local independent pubs that started after the last budget is urging the government to help them in this one.

In his first week as Prime Minister, Andy Burnham pledged to cut business rates for pubs by 20%. Details are expected from his Chancellor, John Healey, in the Budget on Wednesday.

But as Hannah Winman, a pub campaigner from Lydney, Gloucestershire, put it: "Most pubs saw their business rates go up 100% last year, so a 20% discount doesn't cut it."

Another landlord, Rob Moore, who runs a pub in Keynsham, between Bristol and Bath, said he had not made any profit for three years. "There's so many taxes, you just struggle to keep up," he said.

Meanwhile, around 300 pubs have already closed this year. At his bar in Pewsey, Wiltshire, Jerry Kunkler feared that rates would not be cut until April 2027.

"By that point, we'll lose another 15 or 20 pubs in Wiltshire alone," he said.

So why do so few pubs turn a profit? What do they want from the Budget? And, most importantly, will they get it?

Last year's Budget sparked a wave of pub campaigns across the country, several in Gloucestershire. Early in January, dozens of landlords met in Phil Kiernan's pub, The Farmer's Boy, near Newent in the Forest of Dean.

I heard story after story of publicans working all hours because they could not afford staff.

The catalyst for the campaign was a review of Business Rates. A complicated, often ignored tax, the rates hit the front pages when pubs faced, on average, a 76% increase.

Many I met saw their bills double.

Landlord Luke Honeychurch, from Horsley near Stroud, said the tax increase on his pub would leave him "unable to pay myself a wage at all".

Since then, ministers have offered some relief.

First, Rachel Reeves announced a 15% discount on business rates, with extra transitional reliefs. Then in July, Andy Burnham said a further 20% cut would be detailed in the Budget this week.

It is also widely expected that the threshold to pay Business Rates will be increased, meaning many smaller pubs will not pay at all.

So are landlords happy now?

"No, of course not," Phil Kiernan says when I go back to the Farmer's Boy.

"It will save me what, £40 a week? When my electricity bill has just gone up to £600 a week? And it's just tax after tax after tax on hospitality.

"It's just soul-destroying."

Business rates, it seems, were just the final straw. Pubs say they were already struggling from the 2024 Budget's hike in national insurance.

Huge increases in electricity and gas bills have kept coming. And now the minimum wage has been equalised for young people, making them more expensive to hire than they used to be.

The Gloucestershire-based campaign group Hands Off Our Pubs (Hoop) has seen 500 pubs join up nationwide. Mark Terry-Lush is the organiser and says pubs just cannot afford to hire young people any more.

He said: "Our young people need jobs in hospitality, it's their introduction to the world of work.

"The more that businesses are taxed, the less young people they can employ. And with increases in national insurance and wage rises, they can employ fewer and fewer people."

"I haven't made a profit in three years," publican Rob Moore tells me. "I would love to pay corporation tax, but you have to turn a profit for that."

Moore runs two pubs between Bristol and Bath, in Keynsham and Pensford. Both looks bustling when I pop in, with a programme of quiz nights and Sunday roasts.

But busy does not mean profitable.

"I've just been trying to keep my head above water," he tells me. For him, and hundreds of thousands of other pub owners, the solution is simple - cut VAT on hospitality firms.

"About 400,000 of us have signed a petition now," he explains.

"Cutting VAT is the simplest lever the government has. It means we can pass a little bit back to the customer, invest in our businesses and hire people again.

"We think this will save half the pubs that will otherwise close next year, over 500 pubs."

I hear the same argument from an accountant who has dozens of pubs, hotels and cafes on her books. Hannah Winman meets me at the Speech House Hotel, in the Forest of Dean.

"I'm in lots of people's numbers," she tells me. "And I think people don't realise just how bleak it is.

"You've got your business rate increases, your NI increases, your VAT, that money has got to come from somewhere, and all you can do is put your prices up - but if you do that, people stop coming."

Naomi Hands, who runs the Speech House Hotel, says small firms like hers are "just tax collectors for the government really, we don't make any money".

Both agree that bringing VAT down from 20% to 10% on hospitality firms would give them "breathing space", as Hands puts it, borrowing the Prime Minister's phrase.

Many point to Europe, where VAT on hospitality is 10% or even 7%.

In Ireland, Phil Kiernan tells me: "They cut it to 9%, but then they cut it further to 7% because they realised people were coming out again, the pubs were busy again. It actually brings in more money."

It is a high profile national campaign for sure, led by celebrity chef and landlord Tom Kerridge who grew up in Gloucestershire.

But analysts calculate halving VAT on hospitality firms would cost the government around £11bn. And John Healey does not have money to hand out.

Pubs insist that cutting VAT would boost trade, so might actually raise more money.

Certainly the new prime minister has sounded sympathetic. Announcing the plan to cut business rates in a pub in Essex, Burnham said it was a "first step" and that "pubs in particular need to know that the cavalry is coming".

The discount will cost the government £100m, far less than the VAT cut landlords are asking for.

Will that mean there is more help on the way? Across the West of England, hundreds of landlords will tune in to find out when the Chancellor gets to his feet on Wednesday.

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