Pub closures rise sharply highlighting planned business rate change could decimate sector
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The number of pubs in England and Wales that shut their doors for good rose sharply in the first half of 2023, prompting warnings to the government that planned rises in business rates could force further closures in the beleaguered sector.
Figures show that 383 pubs, or more than two a day, “vanished” in the first six months of this year, almost matching the total for the whole of 2022, when 386 were lost.
The data, from the commercial real estate analysts Altus Group, measures the number of pubs that have closed down permanently because they have either been demolished or converted for use as homes or offices.
The chief executive of one of Britain’s leading pub groups joined Altus in warning the chancellor, Jeremy Hunt, that more closures could follow if he goes ahead with plans to scrap a discount on business rates.
Chris Jowsey, the chief executive of 1,000-strong chain Admiral Taverns, said the relief was vital for many pubs.
“Without it, costs for many pubs will rise dramatically by many thousands of pounds, fuelling inflation and forcing closure for many independents,” he said.
“Having survived Covid-19 and the cost of living crisis, it would be tragic if the government now chose to increase rates bills and brought about pub closures.”
Pubs, like other hospitality, leisure and retail businesses, now benefit from a 75% discount on their business rate bills, capped at £110,000.
Hunt announced the £2.1bn relief scheme at his autumn statement in November 2022, but the discount is scheduled to end in March 2024.
The effect of the relief being phased out will be exacerbated by a scheduled rise in the headline business rates in line with inflation, an increase set to take effect in April next year. This could add 6% to bills, Altus Group said, calling on Hunt to continue rate relief beyond March next year.
“With energy costs up 80% year-on-year, in a low-growth, high-inflation and high interest rates environment, the last thing pubs need is an average business rates hike of £12,385 next year,” said Alex Probyn, the head of property tax at Altus Group.
The pubs industry, one of the hardest-hit by the restrictions on socialising imposed during the pandemic, has struggled to recover in the face of sky-high energy bills, the soaring cost of ingredients and difficulties in hiring staff.
Britain’s biggest pub group, Stonegate – the owner of chains such as the Slug & Lettuce and Yates’s – has told patrons it will start charging them a 20p premium on pints during busy periods, such as the weekend.
The Federation of Small Businesses (FSB) is also urging the government to extend the 75% rates relief discount for retail, hospitality and leisure businesses beyond next spring’s cutoff, and to increase the threshold for small business rates relief from £12,000 to at least £25,000. That would remove more than 250,000 small businesses from the rates system, they say.
“For many small businesses on the high street and town centres, the current relief is a lifeline, said the FSB’s national chair, Martin McTague.
“In April this is due to end, creating a cliff edge that will be hugely damaging to thousands of businesses. Ensuring the relief is maintained for those businesses that need it most will be key to their survival.”