A new report has called on the Government to reduce VAT, halve alcohol duty, amend the smoking ban and scrap cumulative impact zones in order to help stop pubs closing.
The report Closing Time – Who’s killing the British pub?, published by the Institute of Economic Affairs, claims that taxation, regulation and declining real wages as a result of the recession have been responsible for the closure of more than 6,000 pubs in the past eight years.
Author Christopher Snowden argues that the blame attached to pubcos for closures has been greatly overstated. As a percentage of total pub stock, net closures represent 16.5% in the pubco sector, and 14.6% in the independent sector.
Put simply – the report states - pubco pubs have been closing at almost exactly the same rate as independents.
“The case against pubcos can only be maintained by portraying transfers from the non-managed to independent sector as closures, but this is clearly inappropriate. The All-Party Parliamentary Save the Pub Group, amongst others, has been guilty of misrepresenting transfers as closures in an effort to support their claim that the ‘the non-managed (largely leased/tenanted) sector has seen many more net closures than those of independent freehouses’ and that ‘pubco pubs are being sold off for alternative use and bulldozed in their thousands’.
“The mere fact that pubcos have sold large numbers of pubs to the independent pub sector does not mean that the ‘tied pub model is a major contributing factor to an increased rate of pub closures,” the report states
The report says the past seven years have been characterised by a flurry of policies which have “severely damaged” the pub industry.
The rise in alcohol duty and introduction of a duty escalator, combined with the increase in VAT to 20% and falling real wages during the recession, have resulted in drinking out becoming much less affordable.
Snowden puts forward a number of solutions:
- Halve alcohol duty. British drinkers pay 40% of EU’s entire alcohol duty bill; the Government should halve alcohol duty to bring it in line with the European average, which would reduce both the cost of living and alcohol fraud
- Reduce VAT from 20% to 15% and introduce a lower rate of VAT for food sold in pubs and restaurants, as happens in many European countries
- Relax the smoking ban. The UK has one of most uncompromising smoking bans in the world. There is clearly a market for venues that allow smoking in one or more ventilated rooms.
- Abolish cumulative impact zones, which currently prohibit new pubs from opening in areas of high demand.
“British pubs may be suffering from long-term cultural shifts, but government policies have hugely exacerbated this trend. Taxation and regulation have been the leading causes of the decimation of the UK pub industry since 2006. The level of alcohol duty in the UK is hugely regressive, hitting the poorest the hardest,” Snowden said.
“Taxes must be lowered, and one-size-fits-all policies like the current smoking ban must be reconsidered if we are to temper the rate of decline of the British pub.”
