The Treasury is killing the pub trade golden goose

By Publican Sam

- Last updated on GMT

Related tags: Duty escalator, Beer duty escalator, Beer, Alcoholic beverage, Public house

Beer sales dropped again in the last three months of 2012
Beer sales dropped again in the last three months of 2012
So beer consumption is down yet again, with the BBPA reporting that 138 million less pints were consumed in the last quarter of 2012 than the same period in 2011. Pub trade consultant Publican Sam considers the implications.

With CAMRA's headline figure of £1 per pint going to the Exchequer in tax and duty per pint this means our economically illiterate, dogma driven Chancellor received £138,000,000 less from beer drinkers. At that rate of decline this would mean a straight line annual decrease in tax revenues of over half a billion pounds.

Given that the government and others are convinced that price the pre-eminent factor in determining consumption of alcohol (otherwise why pursue the ludicrous policy of minimum pricing) surely the retention of the automatic, above inflation beer duty escalator is counter productive to their stated aim of reducing debt and deficit?

What on earth is persuading Mr Osborne, Mr Alexander, the serried ranks of Treasury mandarins and even the Opposition Treasury team from reviewing the position as required by Parliament in its debates on the duty escalator in November 2012 and the pubco/tenant debate earlier this month?

Could it be the incessant trumpeting of pub operating companies reporting increases in like for like (LfL) trading figures that assail us every day?

So far this year I have received email newsletters reporting:

Oakham Inns +7.7% for December sales
Arkells +3% in sales
Innventure +7.2% in sales
TCG +2.5% in sales
Walkabout +8.6% in sales
Be At One +2.6%
Anglian Country Inns "double digit increase in sales"
Grand Union Bars +13% sales
Loungers +4.1% sales

I understand why companies have to continually reassure the ever-insatiable market that they are a sound investment and that business is booming, but could it be that in those very announcements that eagle-eyed observers within the Treasury are convincing themselves, as my local MP puts it "...a balance does need to be struck between fair taxation and sustainability of the brewing industry".

For many thousands of pubs who are at the sharp end of the tax and duty regime of this and the previous administration (lest we forget that it was Labour, not the Coalition who introduced the beer duty escalator) I wonder whether their LfLs are as encouraging.

For, you see, at least seven of those companies listed above who reported such encouraging figures, beer and other alcoholic drinks sales account for less and less in their trading and profit figures. Oakham Inns is proud to declare it is food-led with sales boosted at one of their outlets by 12% from publishing a cook-book!

How close are these experiences to the community pubs that serve little food, either through lack of facilities or customer demand i.e. the wet-led pubs that are the back-bone of the pub trade?

I'll wager the 4.8% drop in beer consumption across the on-trade in the last quarter was borne mainly by community wet-led pubs, which, for many outlets must have meant a far greater decrease. Whilst the health lobby will be rubbing their collective hands with glee at the decrease in consumption, many publicans will be struggling to keep a roof over their heads.

Perhaps when the long-awaited consultation on the regulation of the pub industry (and more importantly the pubco / estate owning breweries) will receive sufficient representations from ordinary, pint-pulling publicans to demonstrate that even with the best will in the world to make their businesses a success through diversification of products and services, owner operated pubs who simply cannot take advantage of the "restaurantisation" of the trade need special consideration in their deliberations.

Perhaps, just perhaps, the mandarins in the Treasury and their political masters will take note of what their colleagues at the BIS are doing and realise that they are killing yet another golden goose (with the continuation of the duty escalator) that the nation's economy and soul can ill afford to lose.

It would be a shame if back street boozers, locals' hangouts  ... all The Moon Under Waters​ disappear from our national heritage and psyche.

Publican Sam runs the How to Run a Pub website​ and has his own blog

Related topics: Legislation