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‘Beer duty drop could help tenanted pub sector’

By Nikkie Thatcher

- Last updated on GMT

Duty drop: a reduction in beer tax could help tenants according to the Forum of Private Business
Duty drop: a reduction in beer tax could help tenants according to the Forum of Private Business

Related tags: Coronavirus

Reducing beer duty in return for pubcos cancelling rents could help tenanted pubs, according to the Forum of Private Business.

The business support organisation has written an open letter, seen by The Morning Advertiser​, to the Government and Treasury, asking for a drop in beer tax in a bid to help licensees amid the Covid-19 pandemic.

The letter said: “We are sure you are aware that five of the big six pub-owning businesses still plan to take rents while the pubs are closed and their tenants have no income coming in, and this will be, by the looks of it, the position for a few months.

“Some family brewers are cancelling rents but others are sitting on their hands, unsure of what to do as they see a negative impact on their business as well.”

It went on to say how, for many years, the brewing industry has asked for a drop in beer duty because in the past, beer tax freezes and reductions have been criticised by the forum and pub campaigners as they benefit the brewer and are not passed down to the tenant.

Balance needed

It also claimed this created an expectation from pub customers for an immediate reduction in the price of their pints that can’t be fulfilled.

However, the letter says the problem being faced at present is pub-owning businesses deferring rents rather than cancelling them, with the exception of Admiral Taverns.

It added: “We need a balance to bail out these pub companies, which are in difficulty, while encouraging them to make sure their tenants survive and pubs remain open so there remains a taxable income from beer sales.

“We appreciate it is unlikely that we can ask the Chancellor to intervene in what is, to all intents and purposes, a commercial dispute and we are aware the Chancellor is being lobbied by the British Beer & Pub Association (BBPA) chief executive Emma McClarkin regarding the grants going straight to the pub-owning companies.”

It went on to say this could open an opportunity for the Government to do “a bit of horse trading to help the BBPA and the pub-owning companies it represents while, in effect, providing a lifeline to these companies tenants”.

Reduce prices

It called a reduction in beer duty now or in the very near future in return for the cancelling of rents while pubs remain closed an “elegant solution”.

It added: “The BBPA has gone on record to state a beer duty reduction of 1p per pint would result in savings of millions of pounds to the industry, which would help brewers and reduce the prices for non-brewing pub companies.

“We recognise this does not immediately help the pub companies, but it would immediately help the tenants who – we feel – are at greater risk and give the pub-operating businesses a longer-term boost for their businesses and reason to take a hit now.”

The letter concluded by calling on the Government to consider the measure and to take the opportunity to speak to representatives of pub operators and tenants to see if the idea is practical.

It said: “We are aware this is a difficult time that needs creative and innovative solutions as well as a degree of compromise and the forum’s approach has always been to try and find solutions to issues rather than just moaning about them and, in this case, we think we may have come up with an idea that could keep all parties happy and save many jobs and livelihoods in the process.”

Forum of Private Business managing director Ian Cass added: “As an organisation, we don’t do a lot of lobbying, we are aware of issues and try and find solutions. This was an example of something that could help everyone.”

Below is the full letter from Ian Cass of the Forum of Private Business:

Dave Mountford from the Forum of Private Business had an idea that we thought may be worth pursuing as a solution to one of the issues the small business economy is facing at the moment, that of pub tenants and the pub companies to whom they pay their rent.

We are sure you are aware that five of the big six pub-owning businesses still plan to take rents while the pubs are closed and their tenants have no income coming in, and this will, by the looks of it, be the position for a few months. Some family brewers are cancelling rents but others are sitting on their hands, unsure of what to do as they see a negative impact on their business as well.

Dave’s idea was to look at beer duty, for many years the brewing industry has continued to ask for a beer duty reduction, orchestrated by the British Beer & Pub Association, which represents the pub-owning businesses.

In the past, beer duty freezes and reductions have been criticised by the forum and pub campaigners as we feel these reductions in beer duty are ‘at source’, so they benefit the brewer but are never passed down to the tenant. It also creates an expectation from pub customers for an immediate reduction in the price of their pints, which can never be fulfilled.

However, these are very strange and difficult times, and the problem we face right now is that pub-owning businesses are only deferring rents rather than cancelling them, with the notable exception of Admiral Taverns.

The campaign #NoPubNoRent, which was launched on Monday, has been tremendously successful but, in effect, is a negative campaign against pub companies that are in so much debt, they are probably unable to survive without the only source of income they have – that of the dry rent.

We, therefore, need a balance to bail out these pub companies, which are in difficulty, while encouraging them to make sure that their tenants survive and that pubs remain open so that there remains a taxable income from beer sales.

We appreciate that it is unlikely that we can ask the Chancellor to intervene in what is, to all intents and purposes, a commercial dispute and we are aware that the Chancellor is being lobbied by the BBPA’s spokesperson Emma McClarkin regarding the grants going straight to the pub-owning companies.

So Dave and I feel that there may be an opportunity for the Government to do a bit of horse-trading to help the BBPA and the pub-owning companies they represent while, in effect, providing a lifeline to these companies’ tenants.

An elegant solution to the problem, could be for the Chancellor to offer a reduction in beer duty now or sometime in the very near future, in return for the cancelling of rents for the period of time that pubs remain closed.

The BBPA has gone on record and stated that a beer duty reduction of 1p per pint would result in savings of millions of pounds to the industry, which would help brewers and reduce the prices for non-brewing pub companies. We recognise that this does not immediately help the pub companies, but it would immediately help the tenants who we feel are at greater risk and give the pub-operating businesses a longer term boost for their business and reason to take a hit now!

We hope you will consider this idea and perhaps take the opportunity to speak to representatives of the pub operators and tenants to see if this idea is practical. We are aware that this is a difficult time that needs creative and innovative solutions as well as a degree of compromise and the forum’s approach has always been to try and find solutions to issues rather than just moaning about them and, in this case, we think we may have come up with an idea that could keep all parties happy and save many jobs and livelihoods in the process.

Related topics: Beer, UnitedWeStand

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