UK Pubs Face 'Punishing Costs,' Leading to Fewer Teen Hires

The UK's hospitality sector is grappling with a "punishing costs" that are forcing businesses like Greene King to make difficult decisions, including employing fewer young people. Jonathan Fearn, finance director at Greene King, one of Britain's largest pub chains, has called for government intervention to alleviate financial pressures.

Fearn highlighted that a combination of increased expenses, including National Insurance contributions and wage hikes driven by the National Living Wage, are creating an unsustainable operating environment. He noted that despite a previously announced 20% business rates reduction for pubs, this relief is insufficient to offset the scale of other cost increases. Greene King now employs 20% fewer 16 to 20-year-olds compared to three years ago, a trend Fearn finds particularly concerning given the industry's traditional role in providing entry-level employment.

"The industry is reaching breaking point," Fearn stated in an exclusive piece for This is Money. He urged the Chancellor to ensure the business rates cut applies to all pubs, regardless of size, and to avoid increasing the Machine Games Duty, which could negate any savings from the business rates relief.

The pub sector is already facing significant challenges, with industry data indicating that approximately one pub closes daily. Profit margins are slim, with pubs earning only about 12 pence per pint sold, despite average drink prices exceeding £5.

Echoing these concerns, Thomas Beahon, co-founder of sportswear brand Castore, warned that the UK's competitive standing is diminishing due to its approach to business and wealth creation. He expressed fears that more entrepreneurs might leave the country in search of more favorable economic environments if the government does not take action to support risk-takers.

Greene King is among firms advocating for a reduction in VAT for the hospitality sector, from 20% to 10%, to align with rates in other European countries. Fearn also called for a freeze in alcohol duty and an increase in beer duty relief for pubs. He emphasized that while recent government commitments to support pubs are encouraging, tangible action is needed in the upcoming Budget to prevent further closures and allow businesses to invest, employ, and grow.