The British Beer and Pub Association (BBPA) has written to the Chancellor ahead of the expected Spring Statement next week calling for long-term support for the sector to ensure a strong and sustainable recovery. The letter urges the Government to:
• Mitigate the energy cost crisis through the extension of the energy price cap to small businesses and supply to joint residential and commercial premises.
• Extend the lower VAT rate for food and drinks sold in pubs and the wider hospitality sector with a view to making this permanent.
• Ensure ADR proposals are in force by no later than February 2023, with an increase in the lower-strength threshold for beer from 3.4% to 3.5% abv and a container size of 20 litres or above for the draught beer reduction.
• Reduce the disproportionate burden on hospitality businesses through either a permanent specific sector multiplier or a high streets relief, bring forward an Online Sales Tax to offset the cost of pubs’ rates and provide for a fairer business tax regime for the digital age.
As the sector emerges from the pandemic it continues to face major headwinds that jeopardise its recovery. With the energy crisis causing regular 150%+ rises in pub energy bills, wiping out any hope of a return to profitability in the near future, and a return to the 20% VAT rate set to prove extremely damaging to the sector.
A new study by Oxford Economics has calculated that despite the significant Government investment in the sector during Covid, over eight hundred pubs closed their doors for good during this time. Many profitable brewing businesses have also been lost and for those that remain debt levels have spiralled, and the future is very uncertain.
As key financial support measures are now withdrawn, trading levels have still not returned to pre-pandemic levels, costs are rising sharply, and confidence among many pub goers remains fragile, which is why the BBPA is calling for action from the Government.
With the right support the sector has a pivotal role to play as the UK recovers from the pandemic and moves forward with levelling up and regenerating towns and high streets.
Emma McClarkin, Chief Executive of the British Beer & Pub Association, said:
“Our sector can deliver jobs and additional economic value in every part of the UK. We are at the heart of communities fostering social cohesion as we reconnect and recover. This is why we are calling on the Government to heed the calls of our Long Live the Local campaign and support the sector during this energy crisis.
“Pre-covid our businesses were already operating under tight margins due to the disproportionate tax burden that we face. As we come out of the pandemic it is crucial this is redressed to ensure business not only survives, but indeed returns to sustainable growth which will in turn support the Levelling Up and High Streets agendas.”