Pub owners urge government help as rising costs squeeze hospitality sector

A landlady who runs two pubs in Cheltenham told the Business and Trade Minister this week that it is "becoming harder and harder" to operate public houses as rising costs, pandemic debt and tax changes squeeze margins across the hospitality sector.

Emma Gibbon, who owns the Plough and Hewlett Arms in Prestbury, met ministers as part of a delegation from the British Institute of Innkeeping, which represents about 13,000 pubs nationwide, to press for policy changes including a reversal or amendment of last year’s National Insurance rise for employers and a reduced VAT rate for hospitality.

Gibbon told the BBC the delegation outlined the combined impact of price increases, the Autumn Budget and "Covid and debt hanging around" on small operators. She said the higher employer National Insurance contribution has a disproportionate effect on pubs because of the sector’s reliance on younger, part-time staff and narrower margins. "We pay taxes that other businesses don't and I appreciate that everybody has to pay their National Insurance but there is a higher proportion of young part time workers in hospitality," she said.

Industry bodies have amplified similar warnings. The British Beer and Pub Association said it wants the government to reform business rates to "unlock growth in every town and village" and to recognise the social as well as economic role of pubs. The association’s chief executive, Emma McClarkin, said the sector "desperately" needs measures to reduce the cost of doing business. The group estimates about one pub a day will close across the UK in 2025 if current pressures persist.

The National Insurance rise for employers last year has prompted renewed calls from some hospitality operators and trade groups for a cut in VAT, which would lower the retail tax on food and drink sales. Gibbon and others said lowering payroll costs and addressing business rates would help pubs retain staff and remain viable in their communities.

A government spokesperson said ministers are supporting the sector through multiple measures introduced since the Autumn Budget. The government pointed to actions that include cutting the cost of licensing, expanding permission for pavement drinks and al fresco dining, extending business rates relief for pubs, cafes and restaurants, cutting alcohol duty on draught pints and capping corporation tax. The spokesperson added that the government understands "pubs are vital to local communities."

Trade groups said those measures, while welcome, do not fully address underlying cost pressures. Business rates reform has been a longstanding request from the hospitality industry, and operators say more targeted help on labour costs would be needed to tackle the immediate challenges caused by the employer National Insurance increase.

The meeting with the Business and Trade Department occurred in the days after the Autumn Budget, when the sector intensified lobbying to influence detail and implementation of the budget's measures. Innkeepers and pub groups have pointed to a volatile post-pandemic trading environment, rising wholesale costs and the lingering debt burden from Covid-era closures and support loans.

Gibbon described the meeting as "a really good opportunity" to set out the "trading realities" that pubs face and said it appeared to have informed ministers about the downstream impact of policy decisions. "I think it opened his eyes to some of the challenges that we face," she said.

Government officials and industry representatives will continue talks as the sector monitors the implementation of announced measures and pushes for further changes to taxes and business rates aimed at stemming closures and supporting local communities that rely on pubs for social and economic activity.