Ritika Janiya
Have you ever gone to a pub to enjoy a nice cold drink with friends? Well, there’s a big problem brewing for pubs in the UK that could mean fewer places to enjoy that pint. The biggest pub company in the country, Stonegate Group, has issued a serious warning: many pubs might have to shut down unless the government helps them out soon.
The Big Worry: Cost of Keeping Pubs Open
David McDowall, the boss of Stonegate Group, which owns popular pubs like Slug & Lettuce, Yates’s, and Walkabout, recently revealed that many pub owners are struggling. He stated that right now, landlords only make a tiny profit of 12 pence for every pint of beer sold! Imagine if you worked really hard and earned just a few coins for all your effort. That’s what these pub owners are facing!
The problem is getting worse because the help they currently receive from the government to reduce business rates is set to end in April. Business rates are like taxes that pubs and other businesses have to pay based on how much money they make and where they are located. If this help is taken away, pub owners will see their bills for these rates go up four times as much! That’s like having to pay four times what you normally pay for your favorite snack.
The COVID-19 Aftermath
Why are pubs in such a tough spot? It all started when the COVID-19 pandemic hit. In 2020, when pubs and restaurants had to close their doors, the government decided to help them out by reducing business rates. This was a huge relief for many businesses trying to survive during such hard times.
Last year, the government said that this help would continue until April of next year, but without an extension, pub owners are afraid they won’t be able to keep their businesses afloat.
Mr. McDowall told the BBC that the hospitality industry (which includes pubs, restaurants, and cafes) has faced many challenges in recent years. First, there was the COVID-19 pandemic, and now there are rising costs everywhere, from energy bills to food prices. The war in Ukraine has also made things worse, pushing up prices even higher.
Many families are feeling the pinch, too, because of the rising cost of living. People are trying to save money, which means they may not go out for a drink as often.
A Call for Help
Recently, Mr. McDowall and other leaders in the hospitality industry wrote a letter to Chancellor Rachel Reeves, asking for an extension of the business rates relief. They warned about the “business rates cliff edge,” meaning that many businesses could fall off and shut down if the help isn’t continued. It’s like standing on the edge of a cliff, and if nothing changes, they will tumble down into financial trouble.
In another report, the British Beer and Pub Association revealed that pubs only make a small profit of 12 pence per pint, even though the average price of a pint of lager is about £4.79. That’s not a lot of money for all the hard work that goes into running a pub!
The Financial Crunch
A lot of people don’t realize just how much money pubs and restaurants pay in business rates. In fact, businesses in these sectors paid nearly £9 billion in business rates last year. This money makes up almost one-third of what the government collects from business taxes! If the government takes away the help, it would cost the hospitality and retail sectors an additional £2.5 billion!
That’s a staggering amount of money that could lead to many job losses and business closures. UKHospitality, another organization representing pubs and restaurants, is also calling on the government to keep its promise to change how business rates are calculated.
Why is This Important?
So, why should we care about what happens to pubs? Well, pubs are not just places to grab a drink; they’re also community hubs where people come together to relax, celebrate, and have fun. When local pubs shut down, it can hurt the community. People lose their jobs, and those cozy places where friends meet disappear.
Also, pubs are often located in busy areas like High Streets, where rent is high. The business rates are based on how much rent the pub could charge if it were rented out. This means that the more popular the area, the more they have to pay. UKHospitality argues that without changes, less money will be invested in these areas, which could lead to fewer jobs and more business failures.
The Government’s Response
In response to the concerns raised, a Treasury spokesperson mentioned that the government is working to support businesses like pubs. They want to make the business rates system fairer and have promised to keep corporation tax at 25%. They also plan to provide clearer tax guidelines so businesses can plan better for the future.
However, many believe these promises need to turn into actions quickly before it’s too late.
