The autumn budget has been announced for 26 November. This will be an important moment for the hospitality industry and pubs in particular. Unfortunately, it comes on the same day as our December/January edition is published and so we will not be able to cover it until the new year. I can however look ahead.
The increase in Employer’s National Insurance Contributions has had a serious effect. The reduction in the Secondary Threshold (the earnings level at which employers start paying) particularly affected pubs. Pubs are claiming to be a special case but so are a lot of groups and I doubt if we will see any change. Interestingly, a number of pubcos and breweries are changing the way in which they operate their pubs. Stonegate, for example, have now converted over 200 managed pubs to a franchise contract under which the operators are deemed to be self-employed. Consequently, the operator and their staff come off of Stonegate’s payroll, reducing what the pubco pays in Employer’s NI. Greene King are trying something similar.
We are being promised a revision of the business rates system but then that has been the case for some time now. It is generally agreed that the system treats pubs unfairly, particularly because it calculates their ratable value on turnover (total takings) rather than net profit. In August, the Treasury confirmed to the Morning Advertiser that it intends to set lower multipliers for pubs. The multiplier is the percentage by which a pub’s ratable value is multiplied to calculate how much is payable. This, in itself, may not help pubs in London because they tend to have higher ratable values.
Energy prices are one of the main contributors to ever-increasing operating costs for both pubs and breweries. There is no ‘cap’ system for commercial sites as there is with domestic properties. This is not within the Government’s direct control but they need to think about devising some way to help.
There is a general belief that lowering beer duty will help pubs but I’m not sure how true that is. Beer duty is paid by breweries and so, to benefit pubs, this would require breweries to pass on the savings. There is little evidence that this happens. Indeed, the last time beer duty was changed, it brought about a major windfall for the multinational brewers. Tim Martin may not be generally popular in certain circles but his campaign to reduce VAT paid by the hospitality industry makes sense to me because VAT is paid out of a pub’s takings.
Mr Martin’s campaign to equalise VAT liability between supermarkets and pubs takes on more significance because, according to the Propel business newsletter, there was a 13.5% year on year increase in home delivery and takeaway food sales in the year to July 2025 and, no doubt, the drink to go with those meals came from supermarkets. This is also a reflection on the effect of the continuing increase in the cost of living.
A more encouraging note comes from the estate agents Christie & Co, who specialize in the hospitality sector. They say that, in the first half of 2025, ‘The UK pub market has shown remarkable resilience, with operators demonstrating great adaptability and a deep commitment to the sector despite economic headwinds and rising operational costs. Demand for pub and restaurant sites remains strong, particularly in the tenanted and leased sector. Reassuringly, approximately 86% of the pubs we sold in the first half of 2025 were for continued use as pubs. Despite cost pressures causing some pubs to close their doors, we are seeing new venues emerge’. Perhaps it isn’t all doom and gloom.
The Government is also intending to reform the licensing system. This may not offer any direct financial help but it could improve trading conditions. More on this in due course.
At the opening of the Great British Beer Festival, CAMRA’s chairman, Ash Corbett-Collins, said, “People want to support their local pubs but the reality is they’re being priced out. With lower disposable incomes and publicans being forced to put up prices through no fault of their own by rising running costs, for a lot of people a regular night out at the pub just isn’t affordable.”
Finally, again according to the Propel newsletter, shortly after the England Women’s football team won the European Championship, the Chancellor of the Exchequer, Rachel Reeves, said, “Whether it’s cheering on the Lionesses or catching up with friends, our pubs and bars are at the heart of British life.” Over to you then…
Tony Hedger