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2017 predictions: JDW boss slams BBPA Brexit warnings

By Nikkie Sutton , 16-Dec-2016
Last updated on 16-Dec-2016 at 11:49 GMT2016-12-16T11:49:18Z

Disagreement: JDW boss Tim Martin doesn't think the BBPA is correct in its predictions
Disagreement: JDW boss Tim Martin doesn't think the BBPA is correct in its predictions

JD Wetherspoon boss Tim Martin has hit back at BBPA chief executive Brigid Simmonds following her claims that Brexit and its consequences will be the main challenge for the sector next year.

He said he felt her predictions were not an accurate portrayal of 2017 or future years.

Martin said: "In a recent prediction for 2017, Brigid Simmonds, of the British Beer & Pub Association (BBPA), told the pub industry press that 'the coming year will be dominated by Brexit and its consequences '.

"Brigid is rightly admired in the licensed trade for her excellent work, but I don’t feel that this is an accurate portrayal of the next 12 months, or indeed future years.

"By far the greatest cost increases for the licensed trade as a whole in the next year will come, rightly or wrongly, from legislation which originates in the UK and is nothing to do with Brexit.

He said the main increase for the trade will be labour, as a result of the minimum and living wage legislation, with further rises in business rates.

Rising costs

The JDW boss said Mitchells & Butlers had previously pointed out that labour costs would increase by around £20m next year thanks to government legislation and business rates would rise by £18m over the following five years.

He added: "In contrast Mitchells & Butlers indicated that total costs from their 'supply chain', including the costs of goods purchased from abroad, would be negligible.

"This view is in line with Wetherspoon’s experience, and indeed the experience of most other companies in the licensed trade which have made public disclosure of their costs."

However, Martin said the real issue for the industry is VAT .

Pubs will need to put their prices up

He added: "Pubs pay 20% VAT in respect of food sales, whereas supermarkets pay nothing, and pubs also pay business rates of about 16p or 17p per pint, compared to about 2p for supermarkets.

"As a result of supermarket labour costs, as a percentage of sales, being far lower than pubs’, combined with much lower business rates, pubs will need to put up their prices in the coming year far more than supermarkets to cover their costs - that is the real challenge for the industry.

"Unless the pub industry can achieve approximate tax equality with supermarkets, pubs will continue to close."

Martin was an outspoken Brexiteer  when the EU referendum took place earlier this year (June) and avidly campaigned for a 'Leave' result.

He added: "The issues around the excellent EU labour force are a valid anxiety for publicans, but it is not being seriously suggested by politicians that EU residents living in the UK should not be allowed to stay and most politicians are sympathetic to immigration where there are labour shortages in the UK - and these potential issues will not make a direct impact for more than two years from now, in any event.

"It is important to emphasise that “Brexit” is not the main issue for the pub trade in the coming 12 months, although it is obviously an important political and economic issue for the future of the country generally."  

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