The finance boss of Greene King has warned that soaring taxes and employment costs have pushed the UK’s hospitality industry to “breaking point”.
Jonathan Fearn, finance chief of the privately-owned pub chain, said decisions taken by the Labour government have “created a cocktail of costs, which have made it ever harder for a pub to run its business.”
The intervention from one of the UK’s biggest pub groups comes as John Healey faces rising pressure to curb the costs facing the hospitality industry at next week’s Budget.
Writing in This Is Money, the Greene King boss urged the Chancellor to take action on a number of rising costs, including business rates, national insurance and VAT.
Inflation has added £400m to the pub company’s business costs since 2019, Fearn said. In this time, hourly pay has increased by more than 60 per cent, while electricity, gas and water bills have risen by half.
Greene King’s total business rates bill is £60m every year across its 1,500 pubs, Fearn said, pointing to research by the British Beer and Pub Association which found that a pub makes just 12p profit from each pint sold.
“These pressures do not exist in isolation. They are piling up and leaving pubs with difficult decisions on investment in improvements, who they will hire and how they serve their communities,” he said.
Fearn said he welcomed Andy Burnham’s decision to cut business rates for pubs by 20 per cent, which was one of the Prime Minister’s first acts after entering Downing Street.
But he said this move, estimated to save each pub about £1,100, “pales in comparison” to other cost pressures and “will almost certainly be cancelled out” by accelerating wage inflation.
Burnham must be ‘champion for pubs’
The Greene King chief urged Healey to address the youth unemployment crisis, which he said “is particularly painful for an industry that has traditionally provided that vital first step into work”.
Hospitality and retail bosses have been urging the Chancellor to unwind some of the hikes to employer national insurance contributions (NICs) introduced by his predecessor, Rachel Reeves, to help them hire more young people.
Fearn called on Healey to cut value-added tax (VAT) on the hospitality industry from 20 to 10 per cent.
Greene King, among other pub groups including JD Wetherspoon, have backed a campaign led by celebrity chef Tom Kerridge, which claims the industry’s VAT burden is disproportionately high compared to neighbouring European countries.
Fearn said: “Britain has been stuck at its 20 per cent rate for years, but the cumulative impact of rising costs means the industry is reaching breaking point.
“It has been hugely encouraging to see the Prime Minister back the nation’s pubs, but if he is to truly be a champion for pubs, he needs his Chancellor to back him with action at the Budget to start reducing our costs and give pubs the breathing space we need to invest, employ and grow.”