Speaking at a debate on financial support for rural pubs, James Wild MP, Shadow Exchequer Secretary, highlighted the growing pressures facing pubs and hospitality businesses following tax increasesand regulatory changes made by the government since its election.
Pubs are vital parts of the community in North West Norfolk’s villages supporting jobs, charities and social life. More than 5,000 jobs in North West Norfolk are supported by pubs and hospitality. Due to government decisions, the British Beer and Pubs Association has warned that the average pub will see its rates increase by £5,300 under Labour.
Across the hospitality sector national insurance thresholds and business rates re-evaluation are placing strains on the industry. The wider hospitality sector is an essential route into work for young people and the increased strain is narrowing an essential pathway to employment.
During the debate, James stressed that the government’s decisions had pushed pubs to the limit and were not doing enough to alleviate pressure
“Sadly, thanks to the Chancellor’s choices, rural pubs face ever-growing pressures. When there are economic headwinds, although some are obviously beyond the Government’s control, the Government should act where they can to support our pubs.”
He contrasted pervious support for pubs, which included a 75% business rates relieve and freezing alcohol duty, with the current approach taken by the government:
“That record stands in stark contrast to this Government’s. Since the Chancellor’s first Budget in 2024, the Government have added layer upon layer of costs to a sector that operates on tight margins, where a single bad month can put a rural pub out of business.”
James then raised the issues relayed to him in meetings with local landlords including alcohol duty and national insurance thresholds:
“Sadly, business rates are only the start. The Government also cut the employer national insurance threshold to £5,000 and hiked the rate to 15%. I know from conversations with landlords in small rural pubs employing four or five people that the extra cost is not a rounding error; it means fewer people employed in those pubs.”
Other regulatory challenges now face the sector as glass bottles will now be considered household waste despite the majority of establishments paying for commercial recycling.
Moving on to the wider hospitality sector James highlighted the impacts of these cumulative costs:
“A survey of 20,000 hospitality businesses—the people taking the risks; the people employing other people—tells a story: 64% plan to cut jobs and 42% will reduce their trading hours.”
Included in those hit hardest are the young people who are widely employed across the hospitality sector and who are now facing fewer jobs and higher unemployment.
“Who is paying the heaviest price? It is young people. Youth unemployment is now at 16%. For generations, a job at the local was their first job—the first foot on the ladder.”
His closing remarks called on the government to change their approach to the sector.
“"When we were in government, we proved that targeted support works. Rather than load on more costs, the Government should support pubs with the decisive fiscal relief that the Conservatives have committed to."
Full Text of Speech:
I am grateful to my hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) for securing this timely and important debate. I will certainly take him up on that pub crawl offer in the recess. It is fitting that this debate takes place on the day of the British Beer and Pub Association’s annual reception, when we will have the opportunity to speak directly to people in the sector and, of course, about the small matter of the England game later.
The BBPA has set out the challenges. For every £3 spent in a pub, £1 goes straight to the Exchequer. As hon. Members have said, rural pubs are at the heart of our villages as community hubs and gathering places. They play an important role in charity, as my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) set out. That is certainly the case in my constituency, where more than 5,000 jobs are supported by the pubs and hospitality sector. Sadly, thanks to the Chancellor’s choices, rural pubs face ever-growing pressures. When there are economic headwinds, although some are obviously beyond the Government’s control, the Government should act where they can to support our pubs.
That is what the previous Government did when we introduced a new strength-based duty system, including two new reliefs: draught beer duty relief, for which my hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) campaigned avidly, and small producer relief. Our support went further. We froze alcohol duty rates in 2023, which we extended in 2024. We also provided a 75% business rates relief scheme for pubs and hospitality businesses, which was a lifeline for thousands of rural pubs that would otherwise have faced higher bills they could not meet.
That record stands in stark contrast to this Government’s. Since the Chancellor’s first Budget in 2024, the Government have added layer upon layer of costs to a sector that operates on tight margins, where a single bad month can put a rural pub out of business. One of the Chancellor’s first decisions on business rates was to halve that 75% relief, increasing the average pub’s business rates bill from £4,000 to £9,500.
Next came the removal of the 40% relief, and then the revaluation. Some pubs are now seeing their rateable value double or triple, with the BBPA warning that 5,000 of the smallest pubs are now facing business rates for the first time. What was the Government’s response? A partial U-turn of a 15% relief after a significant backlash. However, only 6% of hospitality and leisure businesses will benefit, and even then, the average pub will see its rates increase by £5,300 under Labour.
Our commitment is different. The Conservatives would scrap business rates entirely for pubs up to the £110,000 cap, benefiting 250,000 businesses overall. Our cheap energy plan would reduce costs, particularly for rural pubs, and we would not proceed with the regulatory costs in the unemployment Bill, which the Government seem so keen on. Does the Minister really believe that a 15% reduction on a hike is sufficient to help these rural pubs?
Sadly, business rates are only the start. The Government also cut the employer national insurance threshold to £5,000 and hiked the rate to 15%. I know from conversations with landlords in small rural pubs employing four or five people that the extra cost is not a rounding error; it means fewer people employed in those pubs. In February, alcohol duty was increased by the retail prices index—a £400 million cost to the sector, passed on to consumers—which the chief executive of UKHospitality said would be the final straw for some pubs.
Then there is extended producer responsibility. The BBPA has warned that the pub sector will face a hit of about £50 million because glass bottles sold in venues will be considered household waste, even though pubs already pay to have their waste commercially recycled. What is the Minister’s response to that double charging and to the rules that do not reflect how glass bottles in pubs are collected by the vast majority of premises? Taken together, those additional costs create the cumulative impact that my right hon. Friend the Member for Salisbury (John Glen) referred to, which is what matters.
Rural communities feel pub closures differently. A pub closing in a city can be replaced by one around the corner, but when a pub closes in a Norfolk village, it can be lost forever. I am grateful that the Rose and Crown in Harpley, which closed, has been reopened, but that is one positive story. There are other, less positive ones: in the first quarter of this year, 161 pubs closed—a 26% increase on the year before—and we are now on track for 500 pubs to close in the rest of this year.
A survey of 20,000 hospitality businesses—the people taking the risks; the people employing other people—tells a story: 64% plan to cut jobs and 42% will reduce their trading hours. UKHospitality and the BBPA said it together:
“Hospitality’s tax burden….is suffocating the sector…more lost jobs, less investment and business closures.”
Who is paying the heaviest price? It is young people. Youth unemployment is now at 16%. For generations, a job at the local was their first job—the first foot on the ladder.
As Conservatives, we want to see those opportunities given to young people who are out of work, instead of us rejoining the single market and importing people to come and take those jobs. The Government are kicking that ladder away. National insurance hikes, business rates hikes, duty rises, EPR fees, above inflation wage rises and a potential lowering of the drink drive limit, which particularly affects rural pubs—I could go on. With this Buckaroo effect, the Government are presiding over the accelerated loss of a British institution, which is felt particularly acutely in our rural communities.
As a first step, I urge the Minister to join the all-party parliamentary beer group—he will get the same fine tie that I am wearing if he does—where he will hear about these concerns. He will hear how rising costs mean that a third of venues are running at a loss and how the Government need to change course. When we were in government, we proved that targeted support works. Rather than load on more costs, the Government should support pubs with the decisive fiscal relief that the Conservatives have committed to.
