Findlay: what Government should do

By Ralph Findlay

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Related tags: Pubs, Alcoholic beverage

Findlay: optimistic about the pub sector
Findlay: optimistic about the pub sector
BBPA chairman Ralph Findlay called for greater understanding of the good work done in the industry at the BBPA's annual dinner last week.

The British Beer & Pub Association (BBPA) held its inaugural annual dinner last week. Chairman and Marston's boss Ralph Findlay gave a rousing speech to guests, calling for greater understanding of the good work done in the industry. Here's what he said in full.

With a new Government in place, this is the right time to ask ourselves what we want to see happen differently, and better, in the future.

I believe that one major change we, the industry, should be looking for is to expect and demand of ourselves that all of those with influence in our industry — whether politicians or from the media — have a better understanding of the real issues affecting it.

The reason this is so important is that we all know the economy remains extremely tough, and we need to spend our time on the things that really do matter to our customers.

My personal experiences of dealing with the last Government were extremely frustrating — too many consultations that were not genuine two-way conversations; too many policies that were designed to grab headlines but that were at best costly to implement and ineffective in achieving results; and too much rhetoric.

The gulf between political understanding of the issues and reality has been embarrassing at times.

We have to move on from that, and I think we should take credit for the fact that this industry has made huge progress in promoting greater responsibility, through involvement in Drinkaware, in implementing Challenge 21, and improving product labelling, as just a few examples.

This is a vital area in which the BBPA can make a real difference. As far as responsibility is concerned, we "get it''. Although most of us in this room are competitors, we are united in wanting to see long-term success for pubs and brewing in Britain. It's not that complicated. We share a common agenda with Government — we recognise that long-term success is more likely if we work together to reduce harm from excessive alcohol consumption; and we recognise that if pubs are associated with bad behaviour then that will put people off using them.

So what do we need to do? I can think of three key areas where Government policies are being developed that will affect our industry very significantly and where, in my view, the last Government was very wide of the mark.

I'm taking as read that the tenanted and leased operators will do what they said they were going to do following the BISC (Business & Industry Select Committee) inquiry last year; my points are, I think, more about fundamental issues that affect the broader pubs and beer sectors.

Alcohol consumption

My first point is that if you were a visitor from overseas reading the newspaper headlines about drinking then you would be forgiven for thinking that since the introduction of more liberal licensing laws beer sold in pubs has gone through the roof, pubs are open all day and all night, and pubs are the main culprits in contributing to health and behavioural problems associated with alcohol consumption.

This is nonsense — consumption of alcohol in the UK fell by 6% last year, the biggest fall since 1948, and is down by 13% since 2004. Fewer pubs than supermarkets and hotels have taken advantage of 24-hour licensing. According to Government data, there are 7,567 24-hour alcohol licences in the UK.

Of these, 12.5% are in pubs, with 78% in supermarkets and hotels. For reasons I don't understand, around one-third of all 24-hour licences are in 10 licensing districts, including Blackpool, Brighton, Bournemouth, Torbay — and Norfolk.

No one here would claim that pubs don't have to respond to challenges on the issue of responsibility. We, as an industry, do not support pubs that retail alcohol irresponsibly, but most pubs are run by good licensees who work hard to keep good order in their pubs. More legislation and cost will increase the burden on the great majority and is not going to help. Enforcing existing laws, education — as through Drinkaware — and recognition of personal responsibility for bad behaviour must be our priorities.

My second point is that beer-duty policy needs to be consistent with other Government alcohol objectives. Increasing beer duty drives alcohol sales away from pubs, which are regulated places for drinking, into the home. Supermarkets are effective at resisting price increases when duty goes up, making beer duty a tax on brewers, and they are effective in using their scale to keep alcohol pricing low. Pubs have no such choice, so increasing duty becomes a further reason for the widening price gap between pubs and supermarkets.

In this context the duty escalator is an "anti-pub" tax and, in my view, a social and fiscal mistake. In 2010 the amount of beer sold through supermarkets will in all likelihood overtake the amount of beer sold in pubs, if it hasn't done so already.

Duty policy has been a major contributor to this huge change, and to declining tax revenues for the Treasury. The last time I raised this point, I was told that the econometric model showed that duty rates were not yet at the point of revenue maximisation.

In fact, total receipts from alcohol duty increased for more than 20 years to 2009, but have declined in 2009 and in 2010. Something's gone wrong and I suggest that the econometric model needs updating.

Nor is duty policy consistent with recognising that beer has merits as a lower-strength drink. The consequence of increasing beer duty ahead of other categories of drinks is that beer consumption in the UK is in steep decline whereas spirits sales are not, and duty policy has contributed to this change in the mix towards higher-strength alcoholic drinks. This cannot be desirable.

My final point is that Government should do much more to recognise the contribution this industry makes to employment. Brewing is part of the UK's manufacturing base that this Government has said it wants to promote, and pubs are major employers in the wider hospitality sector.

We have a spending review due to be announced on 20 October, which is going to have a major impact on all of us, and is likely to have a negative impact on employment. I read today that PwC (PricewaterhouseCoopers) has estimated that at least one million jobs may be lost.

Pubs and restaurants are great examples of businesses that provide flexible employment opportunities accessible to many people, and instead of looking to increase the tax and legislative burden on them we should be looking instead to reduce the barriers to success. Why not have lower rates of VAT on food and beer sold in pubs? This sector can mitigate some of the job losses likely to result from the spending review. I'm sure that it's easy enough to identify where public-sector jobs need to go, but much harder to identify where the private sector is going to make up the shortfall. Pubs can contribute to that.

An overview

Overall, there are good reasons to be optimistic about our sector if we have the right mindset. Difficult though the past three years have been, those pubs that have prospered demonstrate that the sector continues to evolve and rise to meet the expectations of today's customers.

To help that continue to be the case, the BBPA has a progressive agenda and a strong desire to help bring about improved communication with Government and with media. The contribution and support that you as members offer is essential to that objective.

As Justine Greening MP, Economic Secretary to the Treasury, said in a speech given to the Policy Exchange earlier this year (on a different topic): "This is not about bloated gimmicks; it's about cost-effective, targeted and creative solutions that actually work." If we get to the point where that is true of alcohol policies then it will be a good result.

Related topics: Legislation

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