The Big Interview: Jonathan Neame, BBPA Chairman

Tackling the big issues
It is the elephant in the room, claims the chairman of the British Beer & Pub Association (BBPA) Jonathan Neame. He is talking about the burden of tax on the sector, just a month after taking on the top role at the trade association — a position that he stepped into following the departure of Molson Coors boss Mark Hunter.

As chief executive of Kent brewer Shepherd Neame since 2003, he is known for his strong views against the high rates of duty and taxation.

“Fifty per cent of all GDP in the sector goes to the Government — so that is the big elephant,” he argues.

He was recently critical of the industry, declaring that “apathy” is its greatest enemy and said that everyone must rally around one message — that there is “too much taxation”.

As well as this battle, he believes the industry faces a challenge to get politicians to recognise the importance of pubs and breweries to the economy. Along with tackling legislation and taxation, this is a major target for the trade association, he explains.

“In terms of the focus of the organisation in the next three years, we are obviously now into pre pre-election fever,” says Neame.

“We are just entering the manifesto drafting season. We have to influence all the party manifestos and keep up the pressure.

“The industry has to mobilise, but, ultimately, the Government will listen to people power.”

He believes the time is right for the industry to present its credentials as an employer and revenue generator to the political parties. The ultimate aim for the BBPA is to get the major parties signed up to a position where they want to champion the sector.

“I do think the industry has been very good at building up a groundswell of support. I have never met anybody who does not agree that the industry is over-taxed. I think the industry is completely united about being over-taxed and over-regulated.”

He blames a clique in the Treasury for failing to understand the industry and has accused its taxation policy of being “astonishingly unsophisticated”.

“I have never yet met anybody in Parliament who does not think we have a strong case, but we are held to ransom by a very small clique in the Treasury that doesn’t get it, or gets it but doesn’t want to break the dogma of their current policy position.”

While he has been a strong advocate of cutting all taxes on the sector, the most unsustainable, he believes, is excise duty and the duty escalator, which has seen beer tax rise by 42% since 2008.

He recognises that there are some very strong arguments for reducing VAT, but believes that politically the Government has made it clear it is not going to consider that route.

“I think after the pasty fiasco it is highly unlikely that the Government will identify a special industry or a special case for a VAT carve-out.

“I think the VAT case needs to be fought and I think it is very strong,” he says. “But if the industry, consumers and licensees get behind the attempt to drop the beer duty escalator, I think that is deliverable within two years.

“That has to be the focus for everyone in the industry, to end it in 2015.”

Uncomfortable debate​
While the strategy for the trade association is clear, he admits the recent issue of the pubco-tenant relationship and the accusations from the Business, Innovation & Skills Committee that the BBPA and pubcos had failed to take action was an “uncomfortable debate” for some.

However, he believes there has been “significant progress” in this area with a change in the mindset of pub owners, many of whom have a development agenda and are increasing their support for licensees.  

“I think it was a debate that needed to be had. I think the overwhelming proportion of people in the industry are in a more positive frame of mind about it now,” he says.

“What would be good on the pub debate is if we can get it on a positive agenda. How can we grow our business? What are the things that are going to make people come through the door? And what are we going to do to make people dwell longer?”

And in the spirit of taking a more positive approach, he is eager to point out that it should not be forgotten that there are many pubs trading well and achieving like-for-like sales growth, despite the difficult economic conditions.

“I think many people are trading down from restaurants and hotels to a better value offer, and many are enjoying their leisure time in pubs. We are less exposed to other threats, such as people buying products and services online.

“For all the antagonism and bitterness and the issues of the past five years, we have not lost our relevance at the heart of the community, nor have we lost our opportunity to have very successful businesses at the heart of it all.”

And what of the Government’s plans to place further burdens on the sector with minimum pricing expected, the recent publication of the Health Committee Alcohol Strategy report and the onset of the late-night levy (LNL) and early-morning restriction orders (EMROs)?
Neame believes the Government approach is failing to tackle the actual problem — that it is a minority of between 5% and 10% of people who drink to excess.

“What you need is targeted local initiatives and partnerships with the trade to sort out a particular location or town. Who are the guys causing the trouble and how do we deal with them?”

That is why he is concerned about the lack of impact minimum pricing may have in targeting these problem drinkers.

“Will this have any impact on the behaviour of that 5% to 10%? The industry’s view is that it won’t.

“My fear is that unit pricing is a blanket measure that will do nothing to target the key abusers.”

Regulatory concerns​

In the wider political context he believes such moves by Government are “quite worrying for society”. And he cites other areas such as food and fizzy drinks that are facing the same possible regulatory burdens.

“It seems to me to be the antithesis of the consumer society and the absolute antithesis of individuals making informed choices and taking responsibility for their own lives. I think it is a deeply distressing evolution of democracy and should be resisted.”

Many of these Government policies, along with the recent view of the prime minister who said alcohol abuse is the “scandal of our society” are informed by events of the past, Neame argues.

“I think we are now in a position to ‘box’ binge Britain between 1997 and 2004 when there was a major spike in alcohol consumption.

“But since 2004 every year bar one has seen a decline, so to a certain extent the prime minister is reacting to something where there has already been a material change in behaviour.”

The LNL and EMROs are another example of this. “If there are outlets that cause continued stress on the police and other services they should pay the penalty for that. But the way to pay a penalty for that is a licensing review — that is what the Licensing Act is all about.”

So what of the future? “Let’s champion what we are good at — look at recent events such as the Jubilee and Euro 2012. For all of the issues in our sector, the pub is the number-one focal point for national celebrations for family and cultural events,” he says.

“We need to pick ourselves up. We should be singing from the rooftops about how important we are to the UK economy and society.”