Peter Borg-Neal, CEO of the 18-strong Oakman Inns chain, pens his reaction to The Chancellor’s Budget statement and the sector-specific business rates relief.
While the sector-specific reliefs announced by the Chancellor will bring some small benefit to thousands of pubs it will be of little use to Oakman Inns. Specifically, it means that the proposed pre-budget 45% increase in costs, becomes an increase of somewhere between 43% and 44% which is, by any measure, simply unjustifiable.
Of course, smaller pubs, such as those in rural areas, will benefit. However, those are not the pubs that we have invested over £40m in acquiring and redeveloping. Those are not the pubs that are generating employment growth – we now employ over 500 people.
This “relief” does nothing to lessen the impact of this ridiculous and unfair system. The result of the increase in Business Rates will inevitably reduce our profits and, consequently, our ability to raise further investment funds through bank debt.
This has an immediate impact as we will now open two fewer pubs in the coming financial year. Given that the average Oakman Inn pays annual taxes of circa £496,000 it will mean that there will be a net reduction in income to the Treasury.
Furthermore, the decision to once again delay for the foreseeable future, a ‘root and branch’ review of the business rates system, is deeply disappointing. It displays a woeful lack of understanding of the economic impact that these unplanned and irregularly-timed actions have on businesses of our size.
Even within our own industry, I feel that Oakman is being punished for investing more money, creating more jobs, training more staff to have good careers and trying to support the communities we serve”
The Chancellor’s refusal to adequately address the issue might have some merit if it was fair. However, this unreformed and archaic system of property taxation doesn’t impact on the bottom-line of online traders such as Amazon and even financially benefits companies such as Sports Direct, whose working practices are considerably more “robust” than our own and are unlikely to earn any recognition of their efforts towards better employment.
I set up Oakman Inns with my first pub in Tring in 2007, and we now run a group of 18 sites. We are a quality employer and have been recently ranked 8th in the Sunday Times 100 Best Companies to Work For. Our premises are of high quality, and our average development cost is well over £1 million.
It seems we are being punished for our approach to business. A shop next door to mine in identical site but with lower sales, less employees, less overall costs, less contribution to the community and roughly the same profits will be charged much less.
Even within our own industry, I feel that Oakman is being punished for investing more money, creating more jobs, training more staff to have good careers and trying to support the communities we serve. Because we have worked hard to modernise the old concepts of the old-fashioned boozer or some high-street bars who have lower sales and much lower costs, we are paying the price.
This ridiculous, regressive tax encourages the wrong type of business and we are disappointed and outraged by this lack of basic financial common-sense.
Peter Borg-Neal is CEO of Oakman Inns, which he founded in 2007. The estate comprises 18 contemporary Inns with letting rooms and ‘all-day’ pubs across Bedfordshire, Buckinghamshire, Essex, Hertfordshire, Northamptonshire, Oxfordshire, Warwickshire and the West Midlands.