In a desperately disappointing budget for pubs, the only real new support is for a very small proportion of pubs in England, with the raising of the business rates threshold from £12,000 to £18,000. However this only helps 6-8% of pubs in England and does nothing for pubs in Scotland, Wales and Northern Ireland.  In addition, this change comes after most pubs rates valuation increased, so some pubs that might have benefited previously, will not.

The reality is that this budget has put costs UP for over 95% of UK pubs.

This is because the Chancellor announced a rise in all alcohol duty and the minimum wage. A rise in duty from 1st February 2027 will see publicans paying more for stock which will force another price increase for already struggling customers. On 1st April 2027, there will be a 3.9% increase in the minimum wage, meaning some struggling pubs will have to reduce staff hours as a result, considering how challenging the current environment is, with staff costs having already gone up substantially this year. Whilst some small brewers will be given some relief to the duty increase, this is conplicated and depends on the strength of the beer, so will be of very limited benefit to them and have virtually no impact on pubs.    

Publicans – and other hospitality operators – are feeling betrayed considering that the Prime Minister Andy Burnham had said that “the cavalry is coming”. Instead, despite the Prime Minister previously making positive noises regarding supporting hospitality businesses through a VAT cut, there was no change to the very high level of VAT, no reversing of the employer’s national insurance increase and no support for small businesses with the cost of energy bills. 

Chancellor John Healey also let the cat out of the bag that the Labour Government will break its manifesto promise to replace business rates with a fairer system, one that levels the playing field between high street businesses and online giants. The Chancellor pledged future business rates revenues to Mayors, making clear this reform will not happen. The 2024 manifesto said, “In England, Labour will replace the business rates system, so we can raise the same revenue but in a fairer way. This new system will level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”. Pubs are uniquely penalised in the business rates valuation system and, like other hospitality businesses and small shops, are disadvantaged for having physical premises, despite them being vital for high streets and local economies.  

One bit of potentually positive news for tied pubs is the announcement, not made in the House of Commons, but in the written statement, of a forthcoming guest beer right. This is welcome but needs to be a genuine guest beer right, without any interference from the pub-owning company, to be meaningful and have a positive impact for those publicans and their customers. 

Greg Mulholland, Campaign Director of the Campaign for Pubs said:

“For pubs and publicans, today’s budget is frankly a betrayal of everything that Andy Burnham has previously promised as Prime Minister. We were told that the cavalry was coming, but it seems they’ve been ambushed by John Healey and the Treasury, who’ve offered nothing but scraps.

“The reality of this budget is that it increases costs on 95% of UK pubs, through increases in wages and alcohol duty, which will also of course affect pub customers. The change in the threshold for paying business rates is that it will only help around 6-8% pubs of England and does nothing for pubs in Scotland, Wales or Northern Ireland. John Healey has also let the cat out of the bag that the Labour Government will break their manifesto promise to replace business rates with a fairer system that levels the playing field between high streets and online giants.

“We had really hoped we might at last see some meaningful support but alas it has all turned out to be more hot air. We will continue to campaign for meaningful support for pubs”.

Dawn Hopkins, Vice-Chair of the Campaign for Pubs and a publican in Norwich said:

“This is a deeply disappointing Budget for pubs and hospitality. Pubs and the wider hospitality sector pleaded for meaningful help through the cost-of-living crisis, especially through a cut in VAT, but not only has that not been delivered, but the Budget has actually increased costs for the vast majority of UK pubs.

“Staff costs are going up yet again, and the tweaks offered won’t be enough to stop businesses facing an awful choice: put prices up, cut staff — quite possibly both — or close. We needed action on a scale that matched the crisis facing our industry. This is a bad day for pubs and hospitality and the opposite of what we had hoped for”.

ENDS