Caroline Nodder: Budget could have been worse

Could have been worse. That was the generally held opinion within the pub trade after last week's long anticipated Emergency Budget was unveiled by our new government.

Now, one could interpret this sentiment in a number of ways.

For example, could it be a sign of just how downtrodden our sector has become over the last few years. So used are we to massive duty hikes that anything that isn't completely catastrophic comes as a huge relief. Thus a VAT rise, while it will certainly affect our industry, seems small fry compared to the possibility of another over inflation rise in beer duty. It is almost like a version of corporate Stockholm Syndrome.

We as a sector have been held hostage for so long by the Treasury that we leap on any tiny indication of them being a bit nicer to us and embrace them as our friend. We have now come to expect the worst so when it doesn't happen we are pleasantly surprised, even if the outcome will actually still affect trade.

Another way of looking at this is that this is as a positive sign that our sector is for once not being singled out for punishment above other retail businesses. VAT is a universal tax, it is not specific to beer or any other kind of alcohol, and as such the very least you can say about increasing it is that all retailers will at least be in the same boat.

Yes, consumers will notice the rise and will doubtless tighten their belts that bit more - maybe spending a few quid less over the bar or going out less often to their local - but pubs won't feel this any more than other retail businesses so the playing field, in a way, remains level.

It is a shame, certainly, that George Osborne has not seen fit to cancel the proposed Duty Escalator while he was at it - that remains in the small print and could yet come back to bite us in the proverbial - but one can't help but feel that choosing not to activate it, at a time when he is under greater financial pressure to raise money and cut debt than ever, should be taken as a plus for pubs.

Those I spoke to last week were breathing a sigh of relief and moving on. But many said they were already thinking about January's VAT rise and what they can do to drive sales and encourage customers to come back more often and stay longer.

It seems to me that now, more than ever, is the time for pubs to major on quality, and top service standards and try and move on from price and volume as drivers of their businesses.

Pub prices - especially after the VAT hike next year - are necessarily high because of the huge overheads and taxes that publicans pay, and this means that pub visits are no longer a part of consumers' every day repertoire. They are a luxury. A treat. And unless your customers feel they are enjoying the premium experience they have paid for, they won't be coming back.