The Future of Britain’s Pubs, with Tom Kerridge

0:05For thousands of pubs across the UK, survival has become a political issue. After years of absorbing rising costs and with a sharp increase in business rates looming, the fate of these pubs now rests in the hands of the Treasury. Hi, and welcome back to The Standard Podcast. I'm Tamara Kormornyk. If you're new here, hit follow and give us a rating. For all the latest news, head to standard.co.uk. Coming up, will Labour save our pubs?

0:45It's safe to say that this government is not popular with publicans. In fact, over the past few months, more than a thousand pubs put up signs banning Labour MPs from entering. Their reason? An end to the Covid-era business rates relief scheme this coming April to coincide with business rate rises. And... the pressure seems to have worked. The government has since backed away from plans outlined in the autumn budget, although Chancellor Rachel Reeves is yet to confirm when new guidance will be announced. In this episode, our Going Out editor David Ellis sits down with Tom Kerridge, the Michelin-starred chef, restaurateur and pub landlord, to talk about the future of the hospitality industry and ways the government can support its survival.

1:34Hi Tom, thanks so much for chatting today. So obviously we want to talk about why pubs matter, because we've got this business rates change coming in for pubs that the government say they're going to U-turn on. But that was a week ago and we've not heard anything. And you and I both know that with these rises, which might be 100 ,000, 150 ,000 in some cases, a lot of pubs are going to shut or risk closing. And I wondered if you could maybe start by just telling me what role you think the pub plays in British society. We all meet up in many, many different ways, but the pub is essentially the one that is so intensive and incredibly important for British society.

2:16It's something that we recognize very much. And hospitality is hugely under threat. And these business rates, they obviously main a great deal of added pressure into an already fragile business and industry setup. So the fact that government are looking at them and trying to understand them a little more would have been helpful pre-budget. But the fact that I think the reaction post-budget and being able to create a little bit of a, I suppose, a bit of a media storm and a noise and a voice from people like yourself and everywhere else that members of the industry have been able to reach out and connect to has helped the government look and re-evaluate the space and the situation that they're in.

2:58I think what will happen is, you know, at first, they'll start talking about it as pubs and how they're going to change and how they're going to help that. But I think the rest of hospitality will then just click in and just go, look, it makes no difference. Really, what is the difference now between a High Street pub like I'm sat in now in my Chelsea space, it's a pub. What is essentially the difference between this and one of the High Street pizza places up on the King's Road? We're essentially doing the same sort of thing. It does drop in Delaunay right on Sloan Square. It is essentially, it's a restaurant with a bar.

3:27We all operate with the same cost and the same thing. So it will have to be a much bigger picture for the whole hospitality. It doesn't seem fair or wouldn't seem justified to me if it was only applied to pubs this U-turn. And I suppose for me, I'm slightly afraid that the government will take it as a win of saying, oh, will we save pubs while they ignore restaurants, cafes, your bars, clubs, hotels? And I think one thing that probably should be highlighted, do you think the government recognise how important hospitality businesses are to the high street? Because if you're coming out for your lunch, then they've got you out.

4:02So the impact, I think, that a restaurant or a pub or a bar has is not just did they feed and water someone, but it actually gets them out. It helps the economy in a slightly different way by keeping the high street alive. Do you think that's something the government have really tuned into? It's a very difficult position. I've been so fortunate over the last six or seven years, I say fortunate, that I've been able to speak to front bench ministers cross-party, whether it's from shadow cabinet or cabinet, from previous government to this government. There was a pre-Christmas drinks that I was invited to where Peter Carl was.

4:38It was post-budget and jumped on him and I explained, listen, this is a massive issue. There is some big problems here. For which it was probably the wrong place to do it. However, it did catch him a little bit by surprise and said, listen, get back to me. We'll organise, I'll get a hold of you. We'll organise a meeting. For which I thought it might have been a bit of a fob. another politician being over many years i've had you know is it a tick box process but not at all come the 5th of january i was in i was sat in his office in whitehall the two of us having a conversation he presented to me my business rates figures he'd done the research his team had gone listen this is where these are the figures that you will be paying which are unsustainable they're unrealistic they are um they're not right um and you could see his um i suppose uh not shock but he was understanding how this would affect hugely businesses.

5:32The way that the rates had been worked out, I'm not entirely sure that it had been completely thought through. I then went on to LBC later that afternoon, and then it got picked up. From a government point of view, it feels like it's being reactive. But actually, the business and trade secretary presented the figures to me was being proactive, was going, this isn't right, this isn't it. So then I suppose noise that then comes from myself, noise that comes from yourselves, noise that comes from everybody. He had, I suppose, more ammunition to be able to go to Treasury and go, look, this is wrong.

6:04I've worked these figures out. I've spoken to some industry figures. I've spoken to Tom Kerrigan, who's then gone on to LBC. And this is the noise that's being created. You need to help me here. Try and push this forward. So pubs are the first point. I am a publican. I have four pubs. I use that. That is where my business rates were. However, what it does mean if the business and trade secretary is listening, it means that the door is slightly open. It does give the whole of hospitality the opportunity or the chance to go, look, you've done it for pubs, but what is the difference really? You know, 20 years ago, the term gastropub was bounded around as a place that is like a restaurant, but a pub.

6:42Well, the similarities between all spaces now are very, very similar. I think there is a slight door, ajar through the business and trade secretary where we are able to push our ideas and where things need to change, which the more ammunition he has, the more opportunity he can then go to Treasury and say, listen, things need to change. Yeah, I suppose one thing, it's interesting there, because obviously for you, you recognise that the ministers are hearing your own concerns. I think one thing that, speaking to various publicans that's come out, is that they feel that while the government's been paying lip service to the importance of hospitality, this particular policy and this rates change, while it's acknowledged that academically on paper, it could be seen as being fairer overall, so that like-for-like businesses pay, but what they feel that they're not being heard about is that if the government wants to encourage growth, this is actually doing the opposite, because it means that with this ever-changing landscape and with these added costs, it's just not possible, and that there are a lot of people who are saying that flat is the new growth.

7:48And one of the concerns that seems to be coming out is how can we improve the communication between the industry and government? The hospitality industry has been calling for a ministry of hospitality. It's split across business and trade and the tourism. And there's so many different areas where hospitality drops into without having a complete focus in Whitehall or front bench voice, which is most definitely what it needs. But also hospitality hasn't got its own voice. We've got lots of different trade groups. We have lots of different people, but it's so spread and it's so diverse and it's so different from small little sandwich shops and coffee shops and popcorn cellars and football trade hot dog stands through to pubs, Michelin star restaurants, through to five star hotels.

8:36It's colossal. It's huge. It employs over 3 million people. And there isn't an infrastructure that represents that in the right way. And whilst they all operate in hospitality, they all have similar viewpoints and they need similar help. But the one thing that would be the big point of difference is a front-end reduction in VAT, a front-end reduction in tax. And that point, you could see post-pandemic when it went to 10%, 15%, that hospitality gave it some breathing space. it was allowed to operate, it can pay bills, it can pay people on time. And the costs that have gone up over the last three, four years from utility bill rises, from national insurance increases, through minimum wages, gone up three or four, three times from food inflation, which is huge, through to now the business rates.

9:29All of those issues, they're not costs that go on to the guests. So all it does is it just gets swamped by the industry, which is why everybody, you know, nobody is making money in hospitality. Everybody is either stagnant or going backwards, which it means that it becomes a race to the bottom. Costs start getting cut. You know, you start buying value deeper products or you start looking at, you know, you de-skill all of those things, which means the industry goes slowly downhill, slowly downhill, slowly downhill as a negative impact across board. so in terms of growth being able to operate just being able to allow breathing space a front-end reduction in VAT that is in line with the rest of Europe anywhere between 8 and 12 percent you know 8 and 15 percent that makes a big big difference to allow hospitality to just breathe let alone grow you know yeah or make a profit god forbid god forbid anybody in hospitality makes a profit well I mean this is the other thing that's problem with that is so yeah as these rates come in one of the two ways that any hospitality business can deal with it is either pass that cost onto the consumer, which most businesses can't do, so they know consumers are at a breaking point, or as you say, slowly but surely worse than the product.

10:38And then the other impact of that is that as the product gets worse, there becomes less demand for it, which means that the industry stops being such a big employer because there'll be fewer places. So, the impact of these rates isn't just in the short term, is it? It's not, okay, pubs are going to close. It's more actually long term. Hospitality has made a huge effort in the last 30, 40 years to become an industry and a profession that people really want to take seriously and where they see it as a viable career where you can make good money and you can progress. But if the industry is under threat in this way, it does in some ways slightly undo all that hard work.

11:16Do you think that's a fair statement? It's a bit of a fallacy and it's easy to think that if industry made money, it's the owners at the top that would just take the cash and make it run. It's not, you know, if you speak to anybody that runs a business, any successful business across any industry in any part, the owner and the leader of that business will always tell you it's about the team. It's about the staff. It's about the infrastructure. It's about allowing people to grow personally, professionally. It's allowing people to make mistakes. Hospitality at the minute struggles with all of that because there is no room for reinvestment.

11:46There's no room for apprenticeship schemes. There's no room for putting people on all sorts of different courses and sending them, you know, all over Europe learning about wines or cheeses or just being a part of that exciting industry that I first entered into 35 years ago. The value, the money, the money isn't there. The best businesses are built on fantastic staff. And, you know, to keep hold of those staff, they need investment and they need that opportunity. And it does need that breathing space.

12:16We'll take a quick break. Coming up, David and Tom discuss business rates and their impact on the future of the hospitality sector.

12:30Welcome back. Let's get straight back to the interview.

12:36The rate system is complex and with your multipliers and how that's sorted out and then the tax and the rateable value. And I don't want to get into that because it's confusing if if you understand it. My question for you is, do you think that the rate system in general, obviously, we want this U-turn would be great for hospitality, but do you think there's a broader conversation to be had about an overhaul of the rate system in general, which might make it easier for people to get into the industry and to set up their own businesses? Yeah, I mean, the rate system, I think is so complex and so complicated and how it works.

13:15I genuinely have no idea my my my rates my rates for a 40 cover pub in marlowe the hand of flowers um now obviously it generates um more it's been there 20 years it generates revenue um uh and it's rateable value my rates on that are more than my rent here on my chelsea pub so rates on a pub outside the m25 that's small that seats 40 people are more expensive than my rent to a private landlord on a space in Chelsea and it just none of it makes sense it's not right it I don't I can't understand how it's how it's made I just don't like I have no understanding of the way so yeah there has to be some form of understanding of it I don't think it can be built on um on revenues and turnovers because even large turnovers don't necessarily, they don't make money.

14:11Hospitality doesn't make money. You could be a small pub that generates£400 ,000 a year and make more profit than a much larger operation that generates£4 million a year, but is losing, you know,£120 ,000. But if you're based on turnover, that rateable value will suddenly become even more than the pub that does for it. Like it just doesn't, none of it makes sense. It can't be done on profit. It can't be done on turnover. It has to be done on something I think much simpler based as something that everyone could understand. Yeah. And I think if it was easier for people to understand, it would be easier for people to send a clear, coherent message to government.

14:47So I think that's probably one of the other problems that we have at the moment is that some people want the change in this particular aspect or some people don't want the rate of all value to be assessed as frequently as it's about to be. But because it's so hard to understand, And it means that it makes it very hard for the industry to send a clear message to government. And that can't be right either, I don't think. Yeah, but again, I think that's down to our industry's fault that we have no definitive voice. And there's such a broad spectrum of hospitality industries and different people. But then we have nobody to shout it to.

15:19I'm very fortunate that by coincidence, you know, Peter Carl was at a drinks thing that I jumped on him and said, if that opportunity wasn't there, it wouldn't have been able to have that conversation. And somebody who owns a small pub just outside Oxford is unlikely to have been at a drinks event and is also unlikely to have been asked to be on LBC or Five Live or The Standard. So it's very difficult. The hospitality industry hasn't necessarily got a particular focal point of voice. And even if we did, we don't know who we're shouting it to. Unfortunately, I think that's all we've got time for.

15:57But I just want to say thank you so much for your time. and let's hope that the news on the U-turn gets firmed up as soon as possible and that it doesn't just come for pubs but comes for the industry as a whole. Yeah, we need it at Frostboard. Absolutely. Thanks so much. Thank you. And that's The Standard. For all the latest news, head to standard.co.uk. If you'd like to get in touch, email us at podcasts at standard.co.uk. We'll be back here tomorrow morning. See you then. Thank you.