The Campaign for Pubs has urged the Chancellor, Jeremy Hunt, to announce meaningful direct support for pubs in the Autumn Statement to support pubs through the cost-of-living crisis and stop the current raft of closures caused by the crisis, inflation and high energy bills.
The current crisis has led to a deeply worrying escalation of pub closures. Figures from the Altus Group, measuring the number of pubs that have closed down permanently because they have either been demolished or converted for use as homes or offices, shows that 383 pubs, more than two a day, permanently closed in the first six months of this year, almost matching the total for the whole last year, when 386 were permanently lost.
There is a real danger that without meaningful direct support, the next six months could see hundreds more communities lose pubs, simply because of a short term crisis. The current level of Government support is wholly inadequate and the survival of many pub businesses now depends upon direct and properly targeted Government action focused on pubs themselves. Direct support is needed in the form of a VAT cut and an extension to business rates relief. Cuts to beer and other alcohol duty have minimal impact on pubs but funnel huge tax cuts directly into the pockets of global brewers, giant pubcos and multinational drinks producers, so it is a VAT cut that is needed to help pubs. The Campaign for Pubs made a submission to the Treasury consultation in October calling on the Government to introduce such meaningful direct support for pubs.
At the same time as pub closures have escalated, small breweries have been closing at a rate never seen before, with around 90 breweries having closed their doors over the last year and warnings that even more will stop trading without Government support, further eroding the diversity of the UK brewing sector. The number of small UK breweries going out of business tripled in the last year, according to research from accountancy firm Mazars who reported 45 breweries closing in the twelve months to March 31st 2023, compared to 15 bankruptcies in the year prior, Mazars said.
The cost-of-living crisis and continued inflation is putting huge pressure on pubs and publicans, with rising prices and bills, the increased cost of brewing and beer prices combined with consumers having less disposable income. This crisis follows the Covid-19 pandemic and three nationally imposed lockdowns and further months of restrictions, which saw pubs lose a huge proportion of revenue for 18 months and many pubs (and small breweries) still have significant debts they are paying off, which makes the current situation even more difficult and indeed impossible for some pubs and publicans and breweries. This doesn’t seem to be understood by the Government and HMRC, who continue to demand repayment for Bounce Back Loans and deferred VAT bills, despite the fact that there is another crisis now, one that many publicans and brewers say is even worse.
The level of energy bills for pubs remains unsustainably high and many pubs are stuck in contracts that they had to take at a time when energy bills were at their highest. The level of some contracts is such that it is actually preventing some pubs from making any profit, despite having good levels of turnover and being profitable without such grossly inflated and unreasonable bills. These are thousands of hugely important and usually viable businesses that just can’t deal with the current extortionate level of energy bills, yet so far the Government has done little to tackle this or take on the energy companies, some of whom are exploiting publicans and driving pubs out of business.
Current Government support is simply inadequate and the survival of many pub businesses and small brewers depends upon decisive and properly targeted Government action focused on the small businesses that urgently need it, rather than multinational companies that do not.
The Campaign for Pubs is calling on the Chancellor to introduce in Autumn Statement 2023:
- Reduced VAT (we would like to see 5%, but would welcome 12.5%) but this must be on all hospitality/on-trade sales for 12 months to benefit all pubs, not just those that sell food or provide overnight accommodation, but also benefit the thousands of wet-led community-orientated pubs. Any VAT cut just on food and accommodation (as happened previously) would do nothing to support thousands of important pubs.
- Extension of zero business rates for the next fiscal year and a revision for 2024/25. We also urgently need the Government to announce wholesale reform of the unfair business rates system, which is outdated and flawed and sees pubs paying more than their fair share of rates. The Government previously promised such an overhaul, yet disappointingly has done nothing about it.
- Further support for energy bills for small businesses and for the Government to give Ofgem the power to be able to step in and force the release of business customers from untenable and unfair long-term energy contracts, set when the prices of energy and gas were at their highest levels. Many pubs are stuck in such contracts which are preventing pubs being able to operate profitably.
- Reduce the Flat Rate for VAT
- Extend business rates relief to small brewers and cider makers and other sector producers. Pubs and small brewers pay a very considerable amount of tax and are hugely important contributors to local economies, in urban and rural areas. The loss of pubs has a knock on effect on suppliers, including brewers and local food producers, as well as being key to tourism, a related sector that is crucial in terms of getting the economy out of recession.
Whilst not a Treasury matter, the Campaign for Pubs has also called for the Government to address the threat to pubs through the weak and flawed planning system, with so many viable and wanted pubs still being lost unnecessarily. Developers are systematically buying pubs to develop them, despite them being viable and wanted by the local community. This ‘predatory purchasing’ is rife and needs to be tackled by introducing the Campaign for Pubs Give Pubs Protection policy where no historic (pre-1975) pub would be granted change of use or permission to develop or demolish it, where there is any individual, company or organisation who will pay the independently assessed market value of the pub, as a pub. This would allow many of our pubs to be bought by enthusiastic new owners and made successful again rather than being sold off at development value.
This Government has the opportunity to stop the current raft of pub closures, through targeted measures in the Autumn Statement and through addressing the failure of the current planning system to stop the deliberate asset-stripping of pubs.
Greg Mulholland, Campaign Director of the Campaign for Pubs said:
“Our nation’s world famous pubs are under threat like never before, with the pressures of the cost-of-living crisis combined with a weak and failing planning system that allows developers to close and redevelop pubs against the wishes of communities.
“The Chancellor and Government must finally announce meaningful direct support for pubs in the form of a VAT cut on all pub sales, as well as an extension of business rates relief and support for businesses’ energy bills. Duty cuts don’t help pubs and simply funnel millions to global brewers and giant pubcos without making a difference to the people who actually run pubs.
“Pubs need direct support to get through this crisis and we also urgently need a simple change to planning law to stop the predatory purchasing of pubs by unscrupulous developers”
Dawn Hopkins, Vice-Chair of the Campaign for Pubs and a publican in Norwich said:
“We urge Jeremy Hunt to finally listen to publicans and give us some meaningful direct support by cutting VAT and extending business rates relief. So far it seems this Government only listens to the large brewers and pub companies and not to the people who actually run pubs and are working themselves into the ground trying to make ends meet with energy bills and other prices high and still rising.
“The current level of Government support is simply inadequate and the survival of many pub businesses and small brewers now depends upon decisive and properly targeted Government action. If the Conservative Government cares at all about pubs, the Chancellor will announce direct support and a VAT cut for all pub sales”.
