Rates row shows how little Labour understands business
Whether it’s your after work favourite or your home local – whether you drink or not – everyone has a favourite pub. But the sector is facing a crisis – and we know whose fault it is. We also know the challenges facing British pubs reflect a bigger problem in the relationship between this government and the private sector.
January is traditionally a tough time for pubs and hospitality after an indulgent December but this year the New Year blues came with an extra slap in the face after the government launched a revaluation of bricks and mortar businesses that in many cases has led to a dramatic spike in tax bills via business rates.
Pubs are facing demands for thousands of pounds in additional business rate taxes – some are seeing the tax double, and it’s not unusual under the new system for the bill to rise from £50,000 to over £100,000. That’s exactly what’s happening to chef and pub owner Tom Kerridge, now a leading voice in the fight to save pubs. It would perhaps be churlish to point out that Mr Kerridge was among the handful of business leaders to endorse Labour before the last election.
Of course this new business rates regime comes on top of a mass of new taxes and cost increases that hit pubs hard, ever since the national insurance and minimum wage increases.
On top of that you have high energy costs, inflation and weak consumer confidence. Oh and don’t forget the Employment Rights Act, which adds yet more pain to small employers.
One pub closes every single day
Twenty five years ago there were 60,000 pubs in the UK; today, there are 45,000 and currently one pub closes every day.
Later today, the pubs of Bow Lane and Leadenhall Market will probably be rammed, it is a Thursday, after all, but across the country the picture is very different.
Rural pubs in particular rely on regulars, food service and very often people being prepared to get in their car and make the trip. The government’s planned crackdown on drink driving laws mean that just a single pint could soon put you over the limit, which will inevitably lead to more financial woes for pubs – not necessarily because people will stop driving to the pub if they can’t have a glass of wine, but because booze is a high margin part of the business model, and 100 fewer pints sold each week will be felt on the already squeezed bottom line.
Pushed on all this, particularly on the punishing business rates increases, ministers waffle about supporting the sector with new rules allowing pubs to stay open later and cutting red tape for event licences; measures dismissed as an absolute joke by landlords.
Now, with Labour MPs inundated by distressed constituents, it looks as if the Chancellor will have to make some kind of u-turn. There’s already talk of mass protests of the kind organised by farmers when the government ripped up their future by hiking inheritance tax on family farms.
After months of agony and stress for farmers the government caved in and performed a partial u-turn. Will we see something similar happen with pubs? I hope so, but I have to say this is no way to run a country and no way to treat businesses. It’s no way to treat people.
Most anti-business government ever
Nobody in this government has ever had to stay up late going through the books, worrying about payroll, worrying about breaking even. This lack of experience leads to a lack of empathy and ultimately leads to bad policy.
We saw it in the first Budget with the hike to employment taxes, we saw it with the family farm and family business inheritance tax changes, we’re seeing it with the business rates debacle; ministers – from the Prime Minister down – do not understand the consequences of their decisions. They do not understand the reality of their own policies.
Labour promised to be ‘the most pro business government this country has ever had’ – what did they think that meant? Really, what did they mean by that? Because their taxes and red tape and regulation and arrogance mean that I think this is in fact the most anti-business government this country has ever had.
Whether people run pubs, restaurants, hotels, farms, small engineering firms, family businesses, of whatever size and in whatever sector – they are the lifeblood of our economy, powering and underpinning everything we claim to want as a country; jobs, growth and tax revenue. Unfortunately the government sees only that last one; a source of tax – a way of funding their higher welfare spending.
In need of a stiff drink
Unemployment is rising. Growth is stagnant. Confidence is evaporating. The tax burden is increasing. All those lines are going in the wrong direction and it’s only when the Prime Minister faces a political problem – the threat of rebellious MPs – that he orders a rethink. It’s a disgrace, pure and simple, and it gets me so angry that it if wasn’t quite so early in the day I’d head to the nearest pub and order a stiff drink.
Starmer says he understands all this, that he understands the cost of living pressure and the difficulties facing people. He says he has a plan and that this is the year when people will ‘start to feel it’ – though he somehow manages to make that sound like a threat.
It’s depressing that we have to start the year with yet another sector hammered by government, threatening protest, and with Labour MPs forced to relay business worries to negligent ministers, but that’s where we are and that’s what you get when ministers simply do not understand business.