More than one in 10 British pubs are at risk of calling last orders for good

Publicans and organisations are calling for help as boozers are struggling to stay afloat due to factors including high business rates, soaring bills and the cost-of-living crisis

More than one in 10 pubs are at imminent risk of closure, new figures show.

New data by accounts Price Bailey found 11% of inns are at danger of calling last orders for good as their financial position has worsened over the last 12 months.

Price Bailey analysed the credit risk scores and balance sheet information of all 37,961 pubs and bars in the UK. It found that 7,445, or 20% of the total population of pubs, have negative net assets on their balance sheets.

A business with negative net balance sheet assets is deemed to be technically insolvent. These businesses are vulnerable to going bust, which occurs when businesses are unable to make payments to suppliers or lenders.

Of the 7,445 pubs which are technically insolvent, 4,310, or 11% of all boozers, are deemed maximum risk. That is an increase of 930 from 12 months ago, when 3,380 pubs were classed as both technically insolvent and in the Maximum credit risk category.

Price Bailey said businesses deemed Maximum Risk find it difficult to access funding without personal guarantees from directors and are highly likely to be subject to winding up intention to dissolve notices in the next 12 months.

Pub closures surged to the highest total in over a decade in 2023, smashing the previous decade-high total set only a year previously. Data showed 769 pub businesses entered insolvency in 2023, up from 518 in 2022, beating the previous decade-high total by 48%.

Price Bailey said pub struggles are down to various factors, including high energy, labour and wholesale food and drink costs. At the same time the disposable income of pub-goers has struggled to keep pace with inflation in recent years.

Matt Howard, head of the insolvency and recovery team at Price Bailey, said: “The number of pub closures in the first six months of 2024 matched last year’s record and there are few signs of improvement. More than one in 10 British pubs are technically insolvent and at imminent risk of collapse. These businesses will find it almost impossible to access extra funding unless the owners provide personal guarantees, which few are likely to do in the current climate.”

Publican Rosie Nagaty, who runs the Old George Inn in Sykehouse, South Yorkshire, with her husband John, said she could "100% believe the figures".

She added: "it's the same old for us. The biggest expense we have is staffing costs, which make up 30% of our turnover and VAT which is 20%.

"That’s 50% gone straight away before the cost of goods, utilities such as gas, electric, water, business rate and council tax, maintenance and repairs, entertainment, such as putting live bands on which is becoming too expensive.

"It’s extremely hard on the industry and the biggest plea we would have is to reduce VAT like it was post Covid as well as freeze the discount on business rates. I genuinely believe this would save pubs."

The news comes as think tank Localis released data, supported by the British Beer and Pub Association, which showed that 80% of people believe pubs bring people together, and three quarters say their local battles loneliness.

The pub is also a home for a thriving arts and sports scene, with one in two using pubs to watch live music, and 46% gathering in the pub to watch sports.

Emma McClarkin, CEO of the BBPA, said: “For generations the pub has been the beating heart of communities, offering a warm welcome, fending off loneliness, and bringing people together.

“Pub closures hurt not only landlords and staff, but the very communities they serve. This Government must recognise the important part pubs play and cut the soaring cost of doing business.

"They must use the Budget to reform business rates, maintain the 75% business rates relief, and cut beer duty. Without action to support pubs our communities will be lonelier and more isolated than ever before. Let’s keep the doors open.”