Struggling Pubs Face Steep Decline in England and Wales
The hospitality industry in England and Wales has been hit hard by the ongoing challenges brought on by the Covid-19 pandemic. According to recent data from Altus, 305 pubs were forced to close their doors permanently in the first half of this year, equating to an average of 50 pubs shutting down each month. This sharp decline has raised concerns among experts about the future of the pub industry, particularly as tax rises loom on the horizon.
Altus’ analysis revealed that the number of pubs in England and Wales now stands at 39,096, a significant decrease from previous years. The closure of these establishments has not only impacted the local economies they once served but has also led to a loss of community spaces. Pubs that have disappeared have either been demolished or repurposed for other uses, such as residential properties or office spaces.
Double Whammy of Tax Rises Threaten Pub Survival
Alex Probyn, President of Property Tax at Altus Group, expressed concerns that the challenges facing pubs may worsen in the coming year. He highlighted the impending tax increases in 2025, which could further strain businesses already struggling to stay afloat. The removal of business rates relief, coupled with inflationary rises, is expected to place additional financial burdens on pub owners, potentially leading to more closures in the future.
The government’s decision to phase out business rates relief for hospitality businesses has been met with criticism from industry leaders. UKHospitality estimates that this move could result in an extra £928 million in costs for businesses, with some companies seeing their rates quadruple. Probyn emphasized the detrimental impact of these changes, stating that the average business rates hike of £12,160 next year could be devastating for pubs already facing financial challenges.
Calls for Support and Relief
The British Beer and Pub Association has urged the government to take action to support the struggling pub industry. They emphasized the invaluable contribution that pubs make to society and the economy, highlighting the devastating consequences of pub closures. The association called for measures such as cutting beer duty, reforming business rates, and maintaining business rates relief to help pubs weather the storm and remain essential community hubs.
As pubs continue to face mounting pressures, regional disparities in closures have become evident. The north-west of England experienced the highest number of pub closures, with 46 establishments shutting down in the first half of the year. The south-west and East Midlands followed closely behind, each seeing 37 closures, while Wales had the fewest closures at 15. These regional variations underscore the challenges faced by pubs across different parts of England and Wales.
Tax Hikes Pose Further Threat to Alcohol Industry
In addition to the struggles faced by pubs, the alcohol industry as a whole is bracing for potential tax hikes in the upcoming budget. Reports suggest that Chancellor Rachel Reeves is considering raising alcohol duties to address a significant deficit in public finances. This move could have far-reaching implications for wine and spirits producers, who are still reeling from last year’s substantial duty increase.
The Wine and Spirit Trade Association has warned against further duty hikes, citing the negative impact of last year’s reforms on businesses, consumers, and government revenue. The significant rise in alcohol duties led to a drop in sales and a £1.3 billion decrease in duty receipts over the past year. The association is calling on the government to freeze duty on wine and spirits for at least two years to allow the industry to recover from the financial setbacks.
In conclusion, the challenges facing pubs and the alcohol industry in England and Wales are multifaceted and require immediate attention from policymakers. As closures continue to rise and tax burdens loom large, it is crucial for the government to implement supportive measures to safeguard these vital sectors of the economy. By addressing the issues of business rates, tax relief, and duty hikes, policymakers can help ensure the survival of pubs and alcohol producers, preserving valuable community spaces and sustaining economic growth.