14-04-2025
Reeves's tax raid forcing pubs to close early
Pubs are being forced to shut their doors early as they scramble to cut costs following the Government's tax raid on employers.
Landlords say they have begun calling last orders earlier in the evening to offset extra costs heaped on them by Chancellor Rachel Reeves in her October budget.
Brian Whiting, the owner of several rural pubs in the South East, said he had started to close up at 9pm instead of 11pm during the week after his company was hit with £190,000 in extra annual costs.
His pubs have also begun closing their kitchens at 8pm instead of 9pm some nights. He said the tax situation was 'worse than Covid' for the pub sector.
'I've been going on my own for 25 years, and I think this has become the hardest now for hospitality it's ever been,' he said.
Phil Thorley, the owner of Kent-based pub group Thorley Taverns, said he was considering ending dining times early and reducing staff hours in a bid to offset the tax rises.
He said the impact of the National Insurance increase alone would be £400,000 extra per year for his business. 'That's eight grand a week in perpetuity. So we're going to have to make changes,' he added.
Hospitality businesses are scrambling to make savings after the Ms Reeves increased employers' National Insurance (NI) contributions and lowered the threshold at which they are paid from £9,100 to £5,000.
It has been argued the latter disproportionately hurts hospitality because of the number of part time and low-paid staff employed in the sector.
Adding to pressures is a 6.7pc rise in the minimum wage, and a cut in the amount of business rates relief offered to smaller retail and hospitality companies.
Mr Whiting said: 'That drop in the threshold of NI has massively hit me. I'm very proud that we're often the first job for a lot of youngsters. But is it a false economy now?
'Once upon a time it was good value. We weighed up that they're not going to be as good as older people because they need to learn, and they might not have the confidence.
'Now, when their wages have gone dramatically up, you're getting much more value for money as an employer with employees who are a bit older.'
Almost a third (29pc) of hospitality business owners surveyed by trade organisation UK Hospitality said they were planning to reduce their trading hours because of extra costs associated with the October Budget.
Kate Nicholls, the chief executive of UK Hospitality, said: 'Pubs are being forced to tighten their belts to weather this tax storm and many are choosing to close on quieter days, or to operate on shorter hours to make ends meet.
'Not being able to trade at full capacity hits a pub's bottom line but it also makes it more difficult for communities to pop in for a drink or to eat out with friends and family. That is the custom that our pubs desperately need.'
It comes as data suggests drinkers are going home earlier when they do visit pubs and bars.
Almost a third of drinkers over 55 surveyed by CGA said they were heading home earlier when they go out, compared with 26pc of people aged 35 to 54 and 21pc of 18 to 34-year-olds.
Earlier this month, the Government said it would hand fresh powers to the Mayor of London, Sir Sadiq Khan, to call in blocked planning applications amid a growing outcry over the capital's declining nightlife.
It is also considering allowing hospitality businesses to stay open later and allow more outside dining.
A government spokesman said: 'We are a pro-business government, and we know the vital importance of pubs to local communities and the wider economy, which is why we are supporting them with business rates relief, a 1p cut to alcohol duty on draught pints, capping corporation tax and are protecting the smallest businesses from the employer National Insurance rise – which is helping to fund the NHS.'
