Boris facing pub crisis over soaring costs – landlords fear inflation will run taps dry

Question Time: Liam Halligan says 'real inflation is much higher'

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Venues are battling a litany of pandemic and Brexit issues which has resulted in business costs rising by more than 10 percent. These include rocketing energy bills and a shortage of workers – which have resulted in hospitality wages leaping. A survey of the British Institute of Innkeeping’s members reveals a bleak picture.

More than one in three publicans said they currently have no cash reserves in their businesses.

Three-quarters of respondents said their overall revenues were more than 20 percent down in 2021 compared with 2019.

Meanwhile, half of the publicans surveyed said revenue was down more than 40 percent.

After a previous contract expired at the end of last year, Mr Watson told City A.M that his pub chain had been slapped with an 80 percent increase to its energy bill.

Significant increases to energy costs will have a “material impact on the operating margin”, he warned.

In another hammer blow to business, publicans are also due to be hit with hiked National Insurance employer contributions from April.

Hospitality bosses have called on the Government to take action to protect their businesses.

They argue the Treasury should freeze the VAT rate at 12.5 percent instead of returning it to 20 percent this spring.

Steven Alton, BII CEO said: “Essential interim support will need to be delivered at the upcoming budget, to enable our members to meaningfully start their recovery, whilst they tackle the strategic challenges of resourcing, inflation and rebuilding long term sustainable levels of trade.

“The BII are calling on the government, as the Chancellor reviews the budget ahead of the new financial year, to safeguard these small, essential businesses, supporting local suppliers and brewers, at the heart of their communities.”

There have also been calls for the Treasury to extend support measures for small businesses to help them mitigate the impact of soaring energy costs.

Many small businesses “face many of the same challenges as consumers in the energy market, but without the same protections”, according to Mike Cherry, national chair of the Federation of Small Businesses (FSB).

He added: “The household rebate should be matched by an equivalent business rates rebate, to help the smallest firms which have been weathering these price increases for months already, and which desperately need a measure of protection from the energy crisis storm.”

Operators were also dealt a blow on Thursday after the Bank of England hiked rates, which will increase repayments on some personal and professional debt.

The FSB’s Mike Cherry said this would “add to existing cashflow woes just as tax rises loom.”

In the BII’s survey, 55 percent of respondents said they still had debts of more than £40k per pub.

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