‘Shocking’ soar in enterprise charges could possibly be final orders for pubs, warns Greene King boss

Nick Mackenzie is chief executive of Greene King and chairman of the British Beer and Pub Association

Landlords desperate for relief from relentless cost pressures watched the Budget the week before last with bated breath. They were hoping previous warm words from the Chancellor would finally translate into tangible relief and a wholesale rebalancing of costs for the industry.

Instead, the Budget presented a set of complex changes that left many publicans despairing, questioning how they will stay in business over the coming years.

It’s bitterly disappointing this Budget has done so little to boost the nation’s pubs. And, worst of all, to discover that some of the most disadvantaged are small, independent pubs; the ones at the heart of communities across the country, such as our tenanted pubs.

Business rates sit at the centre of this. The Government knows the rates system is outdated and unfair, disproportionately burdening pubs. This is because they are calculated with rateable values based on a pub’s turnover, which can be very high, rather than profits, which are now incredibly slim due to such high costs.

This Government has been open to listening to businesses, promising fundamental reform. Yet the new 5p discount on the business rates multiplier is nowhere near sufficient – and for most pubs has been entirely cancelled out by the rates revaluation.

While it’s a worrying situation for all pubs, it is especially damaging for small operators, including our tenanted pub partners. We have spoken to many of them over the last week who say cost increases now feel existential. They may be receiving initial relief for the next couple of years, but will see their rates skyrocket in three years’ time – with some seeing increases of over 90 per cent. Quite simply, this isn’t the relief or reform we were promised, and it could be the tipping point that changes the shape of the industry forever.

In fact, hundreds of our tenants who run their own small pub businesses at the heart of their communities in partnership with us now face an increase of over £6million in rating liability by 2029 – even with the transitional relief being introduced over the next few years.

Those at the sharp end of this include our partner, Ioannis Paterakis, who operates the Anchor in Tilsworth near Leighton Buzzard. It’s the last pub in the village, but Ioannis will see their rateable value jump from £10,500 in 2023 to £70,000 in 2026; a 566.67 per cent increase.

Husband and wife team Tom and Sammy Durnion at the Newdigate Arms in Bedworth, Warwickshire, will see a 450 per cent increase – taking them from £10,000 in rateable value in 2023 to £55,000 by 2026.

And Peter Creed and Tom Noest at the Lamb in Shipton under Wychwood in Oxfordshire – a really well known Cotswolds pub – will go from £19,250 in 2023 to £75,000 in 2026.

The shocking scale of these rateable value rises means that final business rates bills will be significantly higher for the majority of our tenanted partners.

Some of these landlords are telling us they just don’t know where they will find the money to pay their bills. With our sector responsible for millions of jobs and growth in every local economy, it is all the more surprising this Government is unwilling to listen to these home truths and back them.

Over the years, pubs have survived all sorts of tests – wars, recessions and even a global pandemic. But the threat today comes from the constant layering of costs – from wage rises, food inflation and recycling requirements, topped off by business rates. The Government has made a mistake in not addressing these costs, so what happens next is crucial.

I don’t want this moment to be looked back upon as one in which the Government could have stepped in, but has chosen not to. Failing to recognise the value of pubs and the need for support will simply result in more closures.

For some, it is already too late to fix the damage done by years of disregard and the assumption that these great British institutions can absorb higher costs.

But for others, considering their future business rates bill and asking how they will pay it, I ask the Chancellor to urgently look again at the system. She has the ability to provide a 20p multiplier discount or equivalent relief to all pubs which would offer immediate relief and make a material difference.

And the longer-term prize remains: a rates system that fairly taxes UK pubs, recognising their real value, creating breathing space for investment that can create jobs and drive growth, and protecting these places that mean so much to Brits all across the country.

The Government could act now to solve this issue. I only hope they will listen.