Pubs facing ‘cost-of-doing-business crisis’

The chief executive of Shepherd Neame says the hospitality industry has been "brutalised"

The chief executive of the country’s oldest brewery says the hospitality sector will face a “cost-of-doing-business crisis” if the government goes ahead with measures thought to be in the Budget.

Jonathan Neame, the boss of Shepherd Neame, says the industry has been “brutalised” in recent years and if plans to put up National Insurance contributions for employers are included it will lead to job losses and price rises for customers.

Mr Neame is also calling for an extension of the help on business rates for the hospitality sector, which is set to run out in April.

The government says it is "supporting businesses, including hospitality, through pledges to make the business rates system fairer".

There are warnings tax changes could lead to higher prices

The boss of the Kent-based brewery, which was founded in 1698, says the last few years have been the most challenging the company has had “since times of global conflict”, partly due to the impact of Covid-19 and inflation.

Mr Neame says they had hoped things might be improving at the start of the summer, but they are “apprehensive” about measures the new government might take.

“I’ve never known business confidence quite so low because of speculation about what might happen [in the Budget],” he said.

The Chancellor, Rachel Reeves, is expected to increase the amount that employers pay in National Insurance contributions by up to 2% when she sets out her tax and spend plans on Wednesday.

Mr Neame says that will have a detrimental impact on the wider economy.

“Pubs are small businesses. There’s not much margin about, and so most people in the sector are currently saying if that came in, they’d either reduce investment or reduce jobs.”

Hospitality 'over-taxed'

Currently, eligible companies can get 75% off their business rates bills up to a maximum of £110,000 a year.

But the scheme, which was introduced for pubs, restaurants, bars and cafes in response to the Covid-19 pandemic, is set to finish in April next year.

Mr Neame is urging the government to stick to a manifesto promise of a fundamental reform of business rates and to extend existing relief until it can be carried out.

“This is the most over-taxed and over-regulated hospitality sector in the world. We pay six times more alcohol tax than in Germany for example. And so we can’t keep piling costs on small businesses in this way because they just won’t become sustainable.”

He says it is hard to see how speculated measures would fit with the government’s aim to grow the economy.

“If half of those things that are being speculated come to fruition then in our view that will be anti-business, anti-growth and will drive up inflation.”

The Chancellor has said she will have to make some "tough choices" in the Budget, describing a £22bn "black hole" in the finances.

An HM Treasury spokesperson said: “We’re supporting businesses, including hospitality, through pledges to make the business rates system fairer, cap corporation tax at 25% and to publish a corporate tax roadmap so that they have some welcome certainty to plan for the future."