Back our pubs and reap the rewards

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Breaking point: Tuppen believes many pubs could go under without a suitable level of  support from the Government
Breaking point: Tuppen believes many pubs could go under without a suitable level of support from the Government
Against a background where the vast majority of pubs are seen as responsibly right, why have successive governments discriminated against them instead of supporting them?

There could be upsides of backing the pub industry: job creation, GDP growth, tax revenues and social cohesion. Pubs have worked hard to establish themselves as the home of responsible drinking — things like Challenge 21, National Pubwatch, Pub is the Hub, to name but a few.

At the same time supermarkets have constantly lowered prices to encourage multi-buy purchasing. Of course, the Government does make some soothing noises about wanting to help pubs, demanding at the same time that supermarkets adopt more responsible pricing.

There has been some real progress — the Government last week announced that it will start, in April next year, a ban on the sale of alcohol below the cost of tax paid. This works out at £10 for a bottle of vodka or 38p for a can of lager.

It takes a brave minister to take on the Treasury, and I would point out something that I think might be behind this definition of ‘cost of tax paid’. If I spent £10 of my taxed income in a supermarket, buying a cheap bottle of vodka or an on-offer tray of lager, the entire £10 will go to the Government — it will go to the Treasury in the form of VAT or duty.

If I spent my £10 in the pub, the Government would still get a fair whack of it, but not all of it. Some will go to pay the rent, the publican’s profit, the heating and bills and all the other things.

So why would the Treasury want to encourage more pub-going and responsible drinking when it gets all the money that people spend on alcohol so long as they spend it in the supermarket?

If we are going to have a ban on below-cost sales, at least make it realistic by including the cost of manufacturing, transport, packaging and distribution.

Call me an old cynic but the only price increase the Treasury wants to see is one arising from duty rises, and it has done a pretty good job of that, increasing duty on beer by a staggering 35% over the past three years alone.

With the exception of Finland, we already have the highest beer duty in the European Union and yet the punitive duty escalator introduced in a panic by the last regime has been retained.

So the Government is continuing with a Labour policy that causes pub closures and job losses and discriminates in favour of the
unregulated sale of alcohol in supermarkets. And, inevitably, this leads to increased problems in terms of alcohol health-related issues and social disorder.

Let me be very clear: I am a great supporter of the Government. I believe its approach to the total mess left behind by the last lot is fundamentally sound. We must reduce the deficit. I am not asking for tax reductions or any changes. We must keep confidence in the bond markets, and therefore interest rates low.

We must allow inflation to bail us out of our unsustainable debt levels, we must be braver still, yet more honest, in dealing with the public-sector pension deficit. Pubs don’t want to be treated as a special case but we do need to see an end to the discrimination that will lead to more pub closures and increased job losses.

More than anything, I want to see the Government recognise that pubs are not the problem but they could be at the heart of the solution.

Pubs are the home of responsible drinking — they have an ability to create jobs in an area where they are most needed, and that is among young people.

On BISC

A powerful and confident government should instil proper analytical discipline rather than political pantomime that we sometimes have to endure with select committees.

This is a sore subject for me, having had to endure four Business, Innovation & Skills Committee reviews since 2004. The first was
all right, but I was a bit shocked at the level of grandstanding from some MPs and I am not sure I will ever forgive my friend Nigel Evans, who is now Deputy Speaker, for his quote of the day: “It seems to me, Mr Tuppen, you have got your tenants over a barrel.”

But I believe the last two reviews — in 2009 and earlier this year — were an affront to our democratic process. Short of time for a proper review, the committee spouted the opinion of a handful of campaigners without bothering to check the facts.

The committee appeared to have largely ignored the extensive re-search that had been carried out by the Office of Fair Trading.

Using parliamentary privilege to — in my opinion — exaggerate, insult and mislead is not what a select committee should do, particularly when accusations are made without the support of proper evidence, and without the basic right of reply
that is enshrined in the realm of British law.

As you can tell, I am a bit peeved — still — about that and you have all seen select committees, many of which are very good and do the job that they have to do extremely well, and hold various people to account.

But you have also seen those occasions when it goes from proper debate and analysis into pantomime, and we really don’t need that.

The smoking ban and costs

The smoking ban was widely accepted as a good thing for the health of the nation, but let’s admit it was bound to lead to pub
closures. Let’s accept that pub-going is moving on, it is evolving with society. Pubs will close and, when there is no longer a viable business, allow the planners to grant a change of use. Then do everything possible to help all the great pubs that remain to be profitable.

Conduct a survey among publicans and very few will complain about the lack of potential customers because they know, like we all do, that the success of a well-run pub relies on the ability to attract customers even during a downturn. Pubs have a history of out-performing other sectors in straitened times, and pub visits are a small but affordable treat when a three-piece suite, a new car, or a holiday may be put on hold.

Publicans complain about rising costs, red tape and irresponsible supermarket pricing. Let’s check some of the facts that are facing our publicans. Utility bills have doubled in three years, food costs are up, business rates are up, employment costs are up, VAT is up, beer duty has increased by 35%, regulatory costs are up and all this against a background where they are fighting hard to get their share of declining discretionary spend.

So we want the Government to recognise the issue and be fair, and we are making progress on this. Maybe, just maybe, we are winning the argument as we seek Government recognition that the pub does play a vital role for communities and that a
well-run pub is indeed the home of responsible drinking.

Community pubs minister Bob Neill is a great supporter of pubs and is doing all he can to help them.

As for red-tape and regulation, I cannot recall how many times I have been to the [former] Department of Trade & Industry and been promised a reduction in regulation.

We have to have a consistent and committed approach to reducing regulation, with promises followed by genuine action.

Supermarket pricing

I am uncomfortable with the imposition of minimum pricing, no matter how attractive it might seem. I be-lieve we need a society with less regulation, not more. However, a minimum-pricing level may well be necessary if we are to have a ban on below-cost selling.

Let’s at least have an honest and sensible definition of cost, not just tax, VAT and duty, but also production, packaging, distribution and everything else that goes with it. Can we ask supermarkets to be responsible? This is where the Association of Licensed Multiple Retailers and the British Beer & Pub Association are all in loud agreement.

Like cigarettes, why shouldn’t alcohol be sold behind the counter rather than picked up by anyone from the shelves? There should be a clear restriction on irresponsible advertising and multi-pack sizes could be reduced to say a pack size of four, rather than 20.
There should be a ban on external advertising of price, something I think could equally apply to pubs. These are simple solutions that the supermarkets should be encouraged, or perhaps bullied to follow, maybe via a voluntary code of practice.

I have one marvellous radical solution that I think would sort it all out — increase the duty on all alcohol and balance that with a proportionate decrease in the VAT charged on alcoholic drinks sold in pubs.

The Treasury will be happy as it is tax-neutral, the health lobby will be happy because alcohol will be much more expensive in superstores. Pubs will be happy because their prices will stay the same, but the prices in supermarkets will catch up. Will that happen? It’s a good idea but I’m not holding my breath.

But there is one thing that should happen in time for the autumn statement — and it is very straightforward.Ministers should also really get behind pubs and beer, and, as a starter, put right the duty wrong perpetrated by Gordon Brown.

It’s time to support beer, the low-alcohol, long drink, 85% of which is manufactured in the UK from products grown here, unlike wines and many spirits that are almost entirely imported. Beer remains at the heart of UK pub-going — 60% of drinks sales in community pubs are beer.

Under Brown as Chancellor, duty on whisky (Scottish) fell 20%. Consumption during that period rose 30%. During that same time, duty on beer (English) rose by 20% and consumption fell by 25%. I know the Government is short of money so any action must be tax-neutral but it cannot be right to discriminate against beer, our national product.

So scrap the duty escalator that will see duty go up by another 7% (at least) this year. Getting rid of it will save 5,000 jobs alone.
If necessary for tax neutrality, make up some of the difference on those products — wine, spirits and even cider — that are being so favoured by the duty regime of recent times.

Let’s get behind beer and pubs, they can be the engines of growth, job creation, and also be good tax-revenue collectors. They are the heart of many communities and the home of responsible drinking.

This article is an abridged version of Ted Tuppen’s speech at last week’s Business in Sport & Leisure conference.

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