By Mark Terry-Lush, Chair of Forest of Dean and Wye Valley Tourism
One pub closed every single day across England and Wales in 2025, according to analysis of government data by tax specialists at Ryan. The British Beer and Pub Association projects another 540 pubs will close in 2026, with more than 5,600 direct job losses across the sector.
Nearly 300 pubs closed across England and Wales in 2024, equating to six a week, and over the last five years, more than 2,250 pubs have shut their doors. Rural areas are being hit particularly hard, and the Forest of Dean is not immune.
When hospitality businesses close, we don't just lose venues. We lose jobs, social infrastructure, and the economic activity that keeps our communities viable. For the Forest of Dean and Wye Valley, and wider Gloucestershire, this crisis demands urgent attention from every business owner who depends on thriving local communities.
The Economic Reality Facing Hospitality
Hospitality businesses have faced a perfect storm over the past decade: the financial crash, Brexit, Covid, recession, and now a toxic combination of rising costs. Years of multiple challenges have left many venues operating on very low margins, if any at all, as one Labour MP noted when describing the pressures facing pubs in his constituency.
The numbers tell a stark story. More than 15,000 pubs closed between 2000 and 2024, according to British Beer & Pub Association figures. These closures represent the slow erosion of community gathering places that have served their areas for generations.
But it's not just pubs. Cafés, restaurants, bistros, delis, and independent hotels face the same cost pressures. Hospitality is not merely a sector – it is social infrastructure that holds communities together.
Why Tax Policy Is Breaking Hospitality
The current tax system treats hospitality like a bottomless revenue stream, yet the reality is far different. For every three pounds spent in a pub, one pound goes straight to the tax man, the BBPA reports. This level of taxation is unsustainable for businesses operating on margins that typically fall to just 10 to 15 percent after all costs are accounted for.
Several policy changes have compounded the problem. Business rate relief was cut from 75 percent to 40 percent in April 2025, significantly increasing fixed costs for businesses already running on thin margins. Pubs have faced increases in employer's national insurance, the minimum wage, energy costs, business rates, inflation, new worker's rights legislation and a rise in alcohol duty.
The cumulative impact is devastating. Recent modelling suggests that one in five UK pubs is now technically insolvent, operating with negative assets on their balance sheets. For these businesses, even a small increase in fixed costs can tip the balance into closure.
The Rural Disadvantage
Rural hospitality businesses face particular challenges that the current system ignores. They pay the same for electricity, wages, National Insurance, pension contributions, and supplies as city-centre venues, but operate with lower footfall, shorter seasons, and customers who must drive to reach them.
The Supermarket Advantage
The tax system creates an unfair playing field between pubs and supermarkets. While alcohol duty and VAT are technically the same whether alcohol is sold in a pub or a supermarket, in practice pubs are taxed far more heavily.
Pubs pay higher business rates based on their trading potential and employ people to serve alcohol on site, absorbing employment and compliance costs. Supermarkets sell alcohol as a loss leader, spread costs across massive product ranges, and benefit from automation and buying power at scale. Rural pubs have none of this leverage, yet carry the same tax and regulatory burden without HR teams or finance departments.
This isn't about avoiding tax – it's about fairness and proportionality.
The VAT Gap
UK hospitality pays 20 percent VAT, one of the highest rates in Europe. Ireland is moving towards 9 percent. Spain sits at 10 percent. Germany charges 7 percent on food. France and Italy operate in similar ranges.
High VAT means higher prices, lower margins, less investment, and fewer jobs. A permanently reduced VAT rate isn't a handout – it's a growth policy that would benefit the entire visitor economy in the Forest.
The Bottle Tax Nobody Talks About
There is another hidden cost quietly squeezing hospitality that deserves the same scrutiny – Extended Producer Responsibility (EPR), often referred to as the “bottle tax”. In principle, EPR is the right idea. It shifts the cost of packaging waste away from councils and on to producers. The problem lies in how it is currently applied to hospitality.
Under EPR, the charge is calculated by the weight of the packaging. That means even everyday items add cost before a drink ever reaches the bar. A small glass bottle of tonic or soda can attract around 4p per bottle. A standard wine bottle around 8p. A heavier prosecco bottle closer to 18p. These costs are passed on by suppliers and absorbed by pubs and hospitality businesses across thousands of units every week.
At the same time, those same pubs still pay for commercial waste collection to dispose of those bottles. In effect, hospitality is paying twice for the same glass – once through higher supplier prices driven by EPR, and again through waste collection fees. That is double charging for a single waste stream.
The impact is cumulative. Margins are squeezed, prices are pushed up, and operational pressure increases, all without delivering additional environmental benefit. Hospitality supports the environmental objective behind EPR. But the policy needs fixing so that packaging used and disposed of on-site is not treated as both producer responsibility and commercial waste at the same time.
Five Solutions That Would Work
Recent political pressure forced a government U-turn on business rates. Now we need to fight for comprehensive reform, not a sticking plaster. Here's what a fair system would look like:
- Business rates must reflect ability to pay. Link rates to turnover and profitability, not just property values. If turnover drops due to flooding, road closures, or a poor season, rates should fall. If you have a strong summer, you pay more. Risk should be shared, not dumped entirely on small business owners.
- Automatic rural pub relief. Rural Rate Relief exists on paper but is patchy, bureaucratic, and inconsistent in practice. Community pubs should automatically qualify. The smallest hospitality businesses should receive 100 percent relief, with relief tapering as turnover rises. If a pub is the last one in a village or parish, it should not be taxed like a retail unit in Manchester.
- Recognise hospitality venues as community assets. Introduce a community asset multiplier with lower rates for venues that are the only pub in a parish, deliver community services like a post office or meeting space, or are registered as Assets of Community Value. When a pub or café closes, the cost doesn't disappear – it shifts to community fragmentation and decline, and the state picks up the bill eventually.
- End the supermarket advantage on alcohol. Address the structural unfairness that allows supermarkets to use alcohol as a loss leader while pubs carry disproportionate tax and regulatory burdens. This requires honest recognition that the current system doesn't create a level playing field
- Fix VAT and remove regulatory double-charging. Set VAT for hospitality at a permanently lower rate so businesses can invest, create jobs and grow local economies. At the same time, strip out regulatory overlap that adds cost without benefit, including reforming Extended Producer Responsibility so hospitality is not charged twice for the same packaging waste through higher supplier prices and commercial waste collection. Environmental policy should support sustainability without undermining viable businesses.
What This Means for Forest Businesses
The beer and pub sector pours more than £34 billion into the economy in one year alone and supports more than a million jobs. When hospitality fails, the ripple effects touch every business in the supply chain, from farmers and brewers to manufacturers and service providers.
For the Forest of Dean, hospitality underpins our visitor economy and provides essential infrastructure for community life. Every closure weakens the ecosystem that supports tourism, retail, professional services, and the cultural life that makes this area attractive to residents and businesses alike.
Pub closures have a further impact on those who are part of the supply chain, including farmers, brewers and other industries who form part of the sector's wider ecosystem.
The Call to Action
Nothing changes without political pressure and cross-party support. If you're a business owner in the Forest or Gloucestershire, your voice matters.
Challenge your MPs and councillors when hospitality is treated as an easy revenue target instead of the growth engine it could be. Share evidence of how closures affect your business and community. Join coalitions fighting for fair taxation and proportionate regulation.
The Forest Economic Partnership exists to tackle exactly these kinds of systemic challenges through collaboration and evidence-based action. This fight for hospitality fairness is a fight for every business that depends on thriving local communities.
Hospitality has shown remarkable resilience through crisis after crisis. But resilience is not infinite. The sector needs structural reform, not just sympathy. It needs a tax system that recognises the social and economic value hospitality provides, not one that treats it as a convenient cash cow.
This is an agenda for growth, for fairness, and for keeping our Forest communities vibrant. You're not fighting alone.
Mark Terry-Lush is Chair of Forest of Dean and Wye Valley Tourism. He recently spoke at the Forest of Dean Pub and Hospitality Summit, where business owners, publicans and community leaders came together to coordinate action on fair taxation for hospitality businesses.