Brewery CEO Warns Hospitality Sector of Impending “Cost-of-Doing-Business Crisis”

The chief executive of the nation’s oldest brewery asserts that the hospitality sector is poised to encounter a “cost-of-doing-business crisis” should the government proceed with anticipated measures within the Budget. Jonathan Neame, who leads Shepherd Neame, contends that the industry has been “brutalised” in recent years, and should plans to increase National Insurance contributions for employers be implemented, it will result in job losses and higher prices for consumers. Mr Neame is additionally advocating for an extension of support regarding business rates for the hospitality sector, a measure scheduled to conclude in April. The government has stated its commitment to “supporting businesses, including hospitality, through pledges to make the business rates system fairer”. The head of the Kent-based brewery, established in 1698, observes that the past few years have presented the company with its most significant challenges “since times of global conflict”, attributed in part to the impact of Covid-19 and inflation. Mr Neame indicates that they had anticipated an improvement in conditions at the beginning of the summer, but they remain “apprehensive” regarding potential measures the new government could implement. “I’ve never known business confidence quite so low because of speculation about what might happen [in the Budget],” he commented. The Chancellor, Rachel Reeves, is anticipated to raise the amount employers contribute to National Insurance by up to 2% when she unveils her tax and spend plans on Wednesday. Mr Neame asserts that this will exert a detrimental impact on the broader economy. “Pubs are small businesses. There’s not much margin about, and so most people in the sector are currently saying if that came in, they’d either reduce investment or reduce jobs.” Presently, qualifying companies are entitled to a 75% reduction on their business rates bills, capped at £110,000 annually. However, this scheme, implemented for pubs, restaurants, bars, and cafes in response to the Covid-19 pandemic, is scheduled to conclude in April next year. Mr Neame implores the government to adhere to a manifesto commitment for a fundamental reform of business rates and to prolong existing relief until such reform can be implemented. “This is the most over-taxed and over-regulated hospitality sector in the world. We pay six times more alcohol tax than in Germany for example. And so we can’t keep piling costs on small businesses in this way because they just won’t become sustainable.” He expresses difficulty in understanding how speculated measures would align with the government’s objective to foster economic growth. “If half of those things that are being speculated come to fruition then in our view that will be anti-business, anti-growth and will drive up inflation.” The Chancellor has indicated she will need to make some “tough choices” in the Budget, characterizing a £22bn “black hole” in the finances. An HM Treasury spokesperson stated: “We’re supporting businesses, including hospitality, through pledges to make the business rates system fairer, cap corporation tax at 25% and to publish a corporate tax roadmap so that they have some welcome certainty to plan for the future.” Connect with BBC Kent on Facebook, on X, and on Instagram. Submit story ideas via southeasttoday@bbc.co.uk or WhatsApp on 08081 002250. Copyright 2024 BBC. All rights reserved. The BBC bears no responsibility for the content of external sites. Information regarding our approach to external linking is available.