(qlmbusinessnews.com . Sat 29th Nov, 2025) London, UK —
Hospitality Sector Alarm: Surge in Operational Costs Threatens Britain's Beloved Pubs
A publican operating a chain of pubs across the South East of England has raised concerns that his operational costs are set to surge by £62,000 annually following the recent fiscal adjustments disclosed in the Budget.
Phil Thorley, proprietor of the Thorley Taverns, has voiced his unease, revealing that business rates—a levy on commercial premises—are poised to climb for 17 of his 18 establishments. This comes despite assurances from Rachel Reeves, who guaranteed reduced taxes for the retail, leisure, and hospitality sectors.
Reeves had pledged to implement the most favourable tax regime since 1991 for pubs, eateries, and small retailers by elevating the duty on high-value assets, notably warehouses, synonymous with online behemoths like Amazon.
The Government has countered, claiming its revisions are set to save the average “independent pub” around £4,800 per annum.
The basis for calculating a firm's business rates, its rateable value, represents the annual rental cost of a property. Despite the Government's commitment to assess 750,000 High Street retail and hospitality businesses using a lesser percentage of their premises' rateable value, the reduction was not as substantial as anticipated.
Furthermore, the valuation rate for numerous businesses has escalated, alongside the phase-out of a 40% discount from April—a COVID-19 relief measure.
Even with some easing measures, many businesses are bracing for a significant uptick in their business rates bill. Analysis by the tax advisory firm Ryan indicates a 42% average increase for small stores, 45% for restaurants, and a staggering 66% for pubs.
Speaking to Reporters Radio 4's Today programme, Mr. Thorley lamented that the rateable value of most of his pubs had “increased substantially”.
“As a modest family-operated business, we're facing a 27% hike in our payable rates, equating to an added £62,000 burden on our operations, which are already struggling immensely,” he explained.
Thorley highlighted that the hospitality sector was already under immense strain following last October's Budget, which saw a rise in employment costs due to increased employer national insurance contributions and the minimum wage.
He fears further minimum wage increases could result in “fewer jobs, diminished investment, and reduced training opportunities for our staff, particularly impacting employment prospects for the younger demographic”.
Moreover, Thorley ominously suggested that the latest Budget amendments might “spell disaster for the British pub”.
Amid speculations of potential further closures, the Government insists it is safeguarding pubs, restaurants, and cafes with a £4.3 billion support package, aiming to cap their business rates bills.
According to a Treasury spokesperson, this is part of broader efforts to support the hospitality sector, which includes reduced licensing costs for outdoor serving and a maintained reduction in alcohol duty on draught beer.
However, critics like Elaine Wrigley of Manchester's Atlas Bar argue that the recent Budget is “misleading”. Wrigley pointed out that despite advertised lower multipliers for specific sectors, her business is still facing a 15% hike in business rates after its valuation soared from £69,000 to £97,000 in 2023.
“We have already increased our prices four times in the past year, but we are now at a threshold where additional hikes could alienate our clientele, thereby compressing our profit margins,” she expressed.
Sacha Lord, Chairman of the Night Time Industries Association, termed the business rates overhaul a “hidden tax” that preys on High Street hospitality venues.
Post-Budget, optimism turned to dismay as the full implications of revaluations dawned on operators, leading Lord to predict unprecedented closures come April, potentially surpassing those witnessed during the pandemic.
The Conservative Party has criticized the Chancellor's business rates revisions, forecasting substantial bill increases for numerous hospitality businesses.
Shadow Business Secretary Andrew Griffith accused the Government of reneging on more substantial rate discounts previously deliberated, warning of ensuing business closures, job losses, and hindered growth.
He urged Reeves to reconsider the strategy promptly, highlighting the urgency for businesses to gain clarity ahead of the April bills.
The Liberal Democrats have similarly called on Reeves to extend a helping hand to the hospitality industry, emphasizing the dire state of pubs, cafes, and restaurants.
Daisy Cooper, a spokeswoman for the Treasury, underscored the impending threat facing high street ventures, advocating for a VAT reduction in the sector to alleviate some of the financial strains.
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