Autumn Budget 2017

Pub industry at risk without major tax changes, warn pub groups

By Claire Churchard contact

- Last updated on GMT

Seat of power: the Chancellor will unveil his Autumn Budget on 22 November 2017
Seat of power: the Chancellor will unveil his Autumn Budget on 22 November 2017

Related tags: Business rates, Pubs, Beer duty, Alcoholic beverage, Brewery, United kingdom, Great british pub

The future of pubs and thousands of jobs linked to them are at risk if the Chancellor does not tackle “disproportionate” taxes in the Autumn Budget next month, a joint letter from eight leading pub organisations has said.

The ‘one voice’ letter, sent to Chancellor Philip Hammond, warned that the sustainability of the pub industry was under threat from “a disproportionate rates burden” and tax rises pegged to the retail price index (RPI) inflation rate of 3.9%. The industry and consumer bodies have joined together to speak with one voice on the two most critical issues – business rates and beer duty (see box out for letter signatories).

The signatories said the sector supports 900,000 jobs across the country and contributes £23bn to the economy. “[Pubs] are among the top three places to visit for tourists coming to the UK” the letter said, highlighting the importance of pubs to tourism. British breweries were also flagged as a vital part of the economy for being the third largest food and drink export from the UK and for being “integral to the great British pub”, with more than 80% of beer consumed in the UK produced here.

Letter signatories

Kate Nicholls, chief executive of the Association of Licenced Multiple Retailers

Brigid Simmonds, chief executive of the British Beer and Pub Association

Colin Valentine, chairman of the Campaign for Real Ale

Mike Clist, chief executive of the British Institute of Innkeeping

Mike Benner, managing director of the Society of Independent Brewers

John Longden, chief executive of the Pub is the Hub

Julian South, executive director of Maltsters Association of Great Britain

Geoff Thompson, chairman of the British Hop Association

Revaluations hit many pubs hard

However, huge business rates rises following the revaluation earlier this year, have hit many pubs hard, while the £1,000 rates relief that was pledged to struggling licensees has failed to materialise for many.

“Pubs pay five times more in business rates than their share of rateable business turnover while online businesses, for example, face a much more benign tax environment,” the letter said. “Transitional relief helps but tapers off, and with the further planned increases over the coming years, this will be very difficult for many pubs to sustain.

“As a property-based, people business, whose core product is beer, community pubs are reeling under the weight of sharply rising taxes and regulatory costs. Already, one pound in every three spent in the pub goes to the Exchequer. For Britain’s brewers, up to half their turnover is excise duty - a huge disadvantage compared with our near neighbours at this crucial time.”

Beer tax escalator resurfaces under another name

Memories of the previously abolished beer tax escalator were revived when the Chancellor pegged beer tax to rise with RPI inflation in the Spring Budget last March. The letter said this had been a “major blow” for pubs and brewers that had “severely undermined fragile sector confidence” and was a stark reminder of how the escalator had inflated beer tax by 42%. 

If these issues are not resolved thousands of jobs and new investment in British brewing and pubs will be at risk, the letter said.

“We are, therefore, urging the Government to extend and increase the pub-specific rates relief beyond this year and set out the timetable for major reform of the system, and implement at least a freeze in beer duty for the duration of the Parliament,” the letter said.

One Voice letter text in full 

Dear Chancellor,

2017 AUTUMN BUDGET: FAIRER TAXES FOR PUB GOERS, PUBS AND BREWERS

Pubs and brewing support 900,000 jobs in towns and communities throughout the UK and contribute £23 billion to the UK economy.
At an uncertain time, with the country divided over many issues, Britain’s pubs are a force for good and have a unique role to play. They are at the centre of Britain’s socio-economic make up, bringing our diverse communities together and enhancing Britain’s reputation abroad. They are among the top three places to visit for tourists coming to the UK.
Brewing is an important British manufacturing sector, the third largest food and drink export from the UK and beer is integral to the Great British Pub. Over 80% of beer consumed in the UK is produced here. A competitive tax environment is essential at this time.
Many pubs are facing huge business rates rises following the 2017 revaluation. The £1,000 pub-specific business rates relief for 2017/18 is very welcome, but the disproportionate rates burden that pubs face continues to grow. Pubs pay five times more in Business Rates than their share of rateable business turnover whilst on-line businesses for example face a much more benign tax environment.
Transitional relief helps, but tapers off and with the further planned increases over the coming years, this will be very difficult for many pubs to sustain.
As a property-based, people business whose core product is beer, community pubs are reeling under the weight of sharply rising taxes and regulatory costs. Already, one pound in every three spent in the pub goes to the Exchequer. For Britain’s brewers, up to half their turnover is excise duty - a huge disadvantage compared to our near neighbours at this crucial time.
The 3.9% beer duty increase in March 2017 was a major blow, severely undermining fragile sector confidence and a stark reminder of the duty escalator period. Under the escalator, beer tax increased by an eye-watering 42%, hitting those on lowest incomes the hardest. Further planned beer duty increases will result in thousands of job losses throughout the UK, and put at risk new investment in British brewing and pubs.

We are therefore urging the Government to
• extend and increase the pub-specific rates relief beyond this year and set out the timetable for major reform of the system.
• implement at least a freeze in Beer Duty for the duration of the Parliament
These measures will create thousands of additional jobs, boost inward investment, tourism and export growth, and ensure a pint in the pub remains an affordable pleasure, bringing together people from all walks of life.
Further details along with additional supporting evidence and analysis can be found in the submissions made by individual organisations to the Treasury pre-Budget call for evidence.
We would welcome the opportunity to discuss this further.

Click here to see the letter

Related topics: Legislation

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