Pub closure warning: Many landlords only make 12p a pint

Pubs face widespread closures unless the chancellor announces an extension to business rates relief in next week's Budget, the UK's biggest pub company has warned.

David McDowall, boss of Stonegate Group, whose pubs include Slug & Lettuce, Yates's and Walkabout, said thousands of landlords currently make just 12p of profit for every pint of beer they sell.

Help on business rates for the hospitality sector in England and Wales is set to run out in April.

Mr McDowall said that if it is removed, small publicans will see their business rates bill quadruple from April.

Along with other costs the businesses are facing, he feared "they don’t have any more to give".

Rates relief was introduced for pubs, restaurants, bars and cafes in 2020 in response to the Covid pandemic when businesses were forced to close.

In the Budget in November last year, the then Chancellor, Jeremy Hunt, announced it had been extended until April next year.

The measure means that companies in England can claim 75% relief on business rates up to £110,000, or 40% for firms in Wales.

Mr McDowall told the BBC's Today programme that the hospitality industry has faced a "barrage" of challenges in recent years.

These include recovering from Covid as well as high inflation, energy costs in the aftermath of Russia's invasion of Ukraine and the effect of the cost of living on customers.

"The complete removal of that rate relief would prove very, very costly for pubs, bars, restaurants and cafes up and down the length and breath of the UK", he said.

The British Beer and Pub Association recently revealed that landlords make 12p profit per pint. The average price of a pint of draught lager was £4.79 in September, according to the Office for National Statistics.

Meanwhile, a freeze on alcohol duty is scheduled to end on 1 February next year.

Mr McDowall is one of a number of representatives from the hospitality industry who this week signed a letter to Chancellor Rachel Reeves asking for relief to be extended.

It warned about "the onrushing business rates cliff edge" facing firms 153 days after she delivers the Budget.

On Thursday, UKHospitality and the British Retail Consortium, whose members also benefit from relief, said that in the year to March, businesses in these sectors paid nearly £9bn in business rates.

This is nearly a third of the total amount of revenue the government raises from business rates.

They said that if relief is removed, it would cost hospitality and retail an additional £2.5bn.

Earlier this week, UKHospitality also called on the chancellor to stick to Labour's manifesto pledge to reform business rates.

The amount businesses pay is based on how much annual rent could be charged on the premises - which is known as the rateable value.

UKHospitality argued that, because its businesses can usually be found in central locations such as High Streets, the cost to companies is high.

Without reform "investment in our high streets will be curtailed, employment opportunities will be squandered and ultimately, we will see higher levels of business failure," it said.

A spokesperson for the Treasury, said: “We’re supporting businesses like our well-loved pubs 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.”