The Campaign for Pubs is calling on the Chancellor, Jeremy Hunt, to listen to publicans and to act to save pubs and small breweries in next week’s budget, with direct support. That support should include a VAT cut on all pubs sales, rather than making any changes in alcohol duty, which do not help pubs or publicans but instead present a multi-million pound tax break to global brewers and producers.
The Campaign has sent a letter from UK publicans backing a VAT cut on all pub sales – something that would make a real difference to pubs all over the UK. A VAT cut on all pub sales is also backed by the British Institute of Innkeeping, the British Pub Confederation and the Forum of British Pubs (and the Forum of Private Business). The Campaign also wrote to the Chancellor on 15th February and called on the Government to understand the serious threat to pubs and small breweries from the cost-of-living crisis.
Pubs are facing a perfect storm of dramatically rising costs, especially energy costs, at the same time as customers are cutting back on spending. Pubs are an intrinsic part of our national character and perform a vital role as community venues, meeting points and safe spaces for monitored responsible drinking. They are also the guardians of the UK-specific cask ale style, which can only be found in UK pubs.
Costs for pubs and for brewers, especially energy and ingredient costs, continue to rise significantly alongside a cost-of-living crisis that reduces customer spending. This is made worse by the fact that pubs are having to pass on at least some of the rising costs faced by brewers and other suppliers, making visits to the pub even less affordable to those on lower and middle incomes.
The current level of support for pubs is simply inadequate, and the survival of many pub businesses and small brewers now depends upon decisive and properly targeted Government action, focused on the small businesses that urgently need it, rather than big brewers and pubcos that do not.
Pubs need direct support in the form of a VAT cut, not tinkering with beer duty and other alcohol duties which, despite Government claims, do not help pubs and publicans. Any changes to beer duty funnels tens of millions of pounds of tax relief to the global brewers and giant pubcos, who do not need support, whilst having a negligible impact on pubs, publicans and pub customers.
Even Draught Duty Relief, which the Government likes to trumpet as a big help for pubs, is actually principally beneficial (yet again) to the big brewers and has a very small impact on pubs. Draught Relief is applied to all beers, not just those from smaller producers. The Draught Relief rate is £19.08 per litre of pure alcohol, or 80p per litre or 46p per pint. The Draught Relief works out around 4 pence per pint and while 4p a pint doesn’t seem much, Carling (owned by Molson Coors) sold 2,121,157 hectolitres in 2022 according to a report in the Morning Advertiser. The introduction of Draught Relief has therefore handed Molson Coors nearly £17 million of tax relief on just one brand, Carling lager.
Similar levels of relief apply to all the global beer brands, so it is easy to see who really benefits from draught duty relief – to the tune of hundreds of millions of pounds – and it isn’t the pub or publicans (or small brewers). In any case, duty cuts or freezes are generally not passed on to publicans to then pass on to the drinkers, as the government has claimed. In fact, publicans have seen nothing but price increases from global brewers in the last 12 months! It is not a way to help pubs or an appropriate way to target tax relief.
The Campaign for Pubs has also called for action to tackle sky high energy bills. This comes as the annual profits at British Gas have increased nearly tenfold, up to £751m in 2023, from £72m a year earlier. Publicans and small brewers have reacted with fury to this at a time when many pubs and small breweries are struggling due to the excessive cost of energy bills.
The Campaign for Pubs is also calling for a cancellation of Covid debt for pubs with outstanding and unaffordable Bounce Back Loans because the cost-of-living crisis, alongside inadequate Government support to compensate for the loss sustained by Covid lockdowns/restrictions, has meant that they have not been able to “bounce back”.
Overall, the Campaign is urging the Chancellor to listen and to deliver a package of direct and targeted support that will enable pubs and small brewers to get through this cost-of-living crisis:
- A VAT cut to at least 10% on all hospitality/on-trade sales for 12 months to benefit all pubs, not just those that sell food or provide overnight accommodation.
- Reduce the Flat Rate for VAT.
- A cancellation of Covid debt for pubs with outstanding and unaffordable Bounce Back Loans.
- Further and more meaningful action on energy bills for businesses.
- Extension of zero business rates for the next fiscal year and a revision for 2024/25.
- Extend business rates relief to small brewers and producers .
Longer term, the Campaign is calling for a new ‘Small Retailer Relief’ to be introduced in the VAT system, whereby independent pubs and other independent small retailers would have a lower rate of VAT than huge chains. This would mean that small, independent businesses – including pubs, shops, cafes and restaurants – can receive direct support from Government without at the same time providing unnecessary and costly tax relief to huge companies and chains. This would focus support where it is needed, to help support high streets, without unnecessarily benefiting multinational corporations. It is also crucial that there is a complete overhaul of the unfair and unique way in which business rates for pubs are calculated, something that Government has said it would look at for years but has never actually done so.
Paul Crossman, Chair of the Campaign for Pubs and a publican in York said: “The Chancellor must use this budget to finally take real action to help thousands of small business pubs and brewers that have suffered terribly through Covid and that continue to bear the brunt of the ongoing deep crisis affecting our sector.
“It is inconceivable that the Government can remain in any doubt of the severity of the current situation for pubs, breweries and hospitality as a whole, so Mr Hunt must now implement the targeted emergency measures required to preserve as many as possible of our hardest hit small businesses in order to protect livelihoods, supply chains and crucial local community facilities across the UK.
“The self-interested lobbying by big business for further beer duty changes is a complete red herring and will do nothing to help beleaguered local pubs or independent breweries. Instead we need action on VAT, business rates, energy costs and persistent Covid debt, all of which are currently conspiring with suppressed consumer spend amid to the ongoing cost of living crisis to close multiple SME pub and brewing businesses every single day.
“On the specific issue of VAT we urge all UK publicans to sign our Campaign for Pubs [link?] letter calling for a VAT reduction for ALL pub sales, including alcohol, so that every precious community pub of any size can be helped during the current crisis, not just the large chain outlets that are able to offer food and accommodation”.
Dawn Hopkins, Vice-Chair of the Campaign for Pubs and a publican in Norwich said: “It is about time this Government listened to the people who really know what is happening to our pubs – the people who run them.
“Publicans survived lockdowns and restrictions only to now be hit with a new crisis, and now when we need targeted support, we are told beer duty changes will make all the difference – the reality is they will make none and do nothing to stem the rise in pub and small brewery closures.
“The Government must listen to and engage with publicans, the people who run our beloved pubs, not the lobbyists for the global brewers and pubcos. And we need support now, we need a VAT cut on all pub sales, including alcohol – our valuable and traditional wet led pubs should not be discriminated against as they were during Covid.
“The lockdowns showed how much we missed our pubs, not just for drinking – alcohol was readily available online or from supermarkets during this time – but for socialising, for listening to live music, for watching sport, for celebrating and commiserating, for community and a sense of belonging that is unique to British pubs, we cannot and must not let that slip through our fingers.”
Phil Saltonstall, brewer representative of the Campaign for Pubs and founder of Brass Castle Brewery said: “Insult is added to injury every time there is the fanfare of a tax measure ‘to save our pubs’ that in reality goes straight onto the bottom line of a few multinational macro-breweries, who in turn drive the ongoing demise of tied UK pub stock through underinvestment and exploitation of landlords.
“As a brewer, I urge that much-needed genuine assistance to the hospitality sector not be mis-directed via alterations to alcohol duty. Invariably, large brewery lobbyists win-out and alterations to the duty scheme provide them with yet another competitive advantage over SME brewery businesses and no assistance to publicans.
“The signs of a failed and anti-competitive, unchecked, vertically-integrated, pseudo-monopoly cosy microbrewer/pubco hook-up are there for all to see, in the depressing daily statistics of pubs lost to their communities and small UK breweries entering administration. If there is a plan to help hospitality, then it surely needs a rethink and this budget offers that moment.”
