Government tax increases ‘sucking cash’ out of pubs, warns Shepherd Neame

The boss of a major UK pub group has called on the Government to stop “throwing road blocks” in front of the industry following a hit from higher labour and packaging costs.

Jonathan Neame, the chief executive of hospitality firm and brewer Shepherd Neame, said “bad policy” decisions are “sucking cash” out of UK pubs.

He told the PA news agency that there is still opportunity in the sector but that it needs reduced policy action from Government to fully thrive.

Firms saw costs jump after increases to the national minimum wage, National Insurance Contributions and the new Extended Producer Responsibility (EPR) packaging tax in April.

It is the latest stark warning from pub chiefs ahead of a key autumn budget in late November.

Last week, the British Beer and Pub Association (BBPA) warned that more than 2,000 pubs could close across the UK next year amid pressure from cost inflation.

Shepherd Neame stressed that it is not closing pubs and in fact investing in new sites but highlighted that the previous budget led to cost challenges for operators.

Mr Neame said: “If you look at the cost rises we’ve faced, more than half of that is down to bad policy and that it is all sucking cash out of businesses like ours.

“If the Government isn’t throwing road blocks in front of pubs, we will grow and invest.

“The sector is full of opportunity and it is still an attractive area but decisions from Government have absolutely made things harder, and it is important to move on from recent negativity.”

It came as Shepherd Neame, which runs 286 pubs, revealed a drop in profits in the face of higher costs.

The company reported that pre-tax profits dropped by 7.9% to £6.3 million over the year to June 28, compared with a year earlier.

Meanwhile, revenues dipped by 2.7% to £164.3 million, compared with the same 52-week period a year earlier.

Nevertheless, retail like-for-like sales were up 4.4% for the year, as it was impacted by reduced beer volumes.

Mr Neame added: “Shepherd Neame is a strong business with fabulous pubs and well recognised brands.

“The company has delivered a solid performance against a challenging backdrop for the sector with consistent outperformance of the market in pub trading, whilst absorbing further cost inflation, in particular in labour and logistics.”