Local pubs react to 'unaffordable' rates increases

The recent shakeup of business rates could have a severe effect on our local pubs.

The rise in business rates for pubs is going to have a profound effect on pubs according to trade bodies UKHospitality and the British Institute of Innkeeping.

Three of the four pubs in Overton face rates increases with The Old House at Home on Station Road being the worst hit. The popular local boozer has been slapped with an eyewatering 146% increase.

This means they can no longer claim Small Business Rates Relief (SBRR), which is proportionally available for businesses whose rates are set at under £15,000. 

The Red Lion in Overton is also beyond being able to claim SBRR and according to government plans, The Greyhound on Winchester Street sees a 38% rise in business rates meaning will begin paying a proportion of their new rates valuation from April next year.

The White Hart’s rateable value remains the same - still at an eyewatering £61,000 a year.

Ian Williams, Landlord of The Old House at Home for 17 years says, told Overton Radio, “When you take into account national insurance, minimum wage, product increases and alcohol duty, everyone needs to prepare themselves for the inevitable price increases.

“We will carry some [loss-leaders] to help our customers, but that still means our profits will be less.”

A survey from the British Institute of Innkeepers (BII) has found that only 1 in 3 of their independent pub members are profitable, with 90% of landlords finding it necessary to increase beer prices, 80% forced to cut staff hours and 41% prepared to cut services offered to reduce costs.  

In a call to support local pubs, Ian at The Old House told us, “People need to use their local pub; an extra customer using the facilities of the warmth, friendly company and connection to the community by buying one or two pints a week can make all the difference.”

The Old House at Home offers Thai food through the week and will host Gary ‘Karaoke’ Myles with their free ‘early new year’ live music event on Saturday 27th December.

It’s widely acknowledged across the retail and hospitality sector that because of recent rates and employment cost increases, in order to balance the books and remain in business, pubs will be employing fewer staff.

“Over a year we’ll end-up with 5 fewer local people employed”, says Ian from The Old House at Home.

Victoria Harber from The Red Lion agrees, “When we re-opened The Red Lion in 2022 we employed [full and part-time] 13 people, today it’s just 7. 

“This new rates increase will inevitably and ultimately force us to employ fewer local people”.

Part of the sector’s concern is the total cost of business operation, particularly in comparison to consumers buying alcohol from supermarkets.

“To enable pubs to survive, there must be a more level playing field against supermarkets”, adds Victoria.

“Across the UK, supermarkets have seen a 4% reduction in rates, while pubs are up an average of 50%. Ian’s 146% is utterly astonishing and a slap in the face for a business that’s doing so well”.

The imbalance between pubs and supermarkets selling alcohol is exposed with the village’s local Co-op on Winchester Street, which will benefit from its rateable value being reduced from £45,200 a year to £44,000 - a reduction of 3%.

Overton’s business rates are collected by Basingstoke and Deane Borough Council, with rates being set by government (Valuation Office Agency), but it’s local councils that apply a ‘multiplier’ to determine - and demand - payments.  

Some businesses including our local pubs will benefit from the available Transitional Rates Relief. 

Ethan Davids, managing director of Chickpea Group, who are currently investing heavily in a pub near Overton told us, “We were pointlessly optimistic before the most recent budget when the Chancellor offered "permanently lower tax rates" for pubs.

“Whilst it was true that the multiplier [the percentage of a pub's rateable value that is paid in tax] was being lowered slightly, our actual rateable value has increased exponentially. Meaning in net terms, we are far worse off.”

The Chickpea Group operates 10 country pubs with the ethos of ‘reigniting rural icons’. 

Ethan added, “Not only are these tax increases unaffordable, they penalise good operators who make a success of underperforming pubs in a tough market.

“Long live the great British pub”.

Legislation states that local authorities like Basingstoke and Deane have ‘a duty to consult with the representatives who are subject to non-domestic rates’.

Basingstoke and Deane Borough Council have been contacted for comment.