Wet-led pubs left disappointed by ‘unfair’ VAT cut

Sunak delivered the Summer Economic Update​ in the House of Commons where he set out the measures as part of the Government’s three-phase ‘Plan for Jobs’.

The rate of VAT applied on "most tourism and hospitality-related activities" including food, non-alcoholic drinks, accommodation and attractions will be cut from 20% to 5%.

The Treasury has also confirmed to The Morning Advertiser ​this includes the supply of non-alcoholic beverages.

Sunak said: "At the moment, VAT on hospitality and tourism is charged at 20%, so I’ve decided for the next six months, to cut VAT on food, accommodation and attractions.

"Eat in or hot takeaway food from restaurants, cafés and pubs; accommodation in hotels, camp sites, B&Bs and camp sites; attractions like cinemas, theme parks and zoos; all these and more will see VAT reduced from next Wednesday (15 July) until 12 January 2021 from 20% to 5%.”

However, publicans who run community venues, focused on their drinks offer have criticised the announcement.

Andy Madsen has been in the trade for more than 30 years and currently runs the Park Inn, Southampton, Hampshire and is a Wadworth tenant of the community, wet-led pub.

He said: “I was really hoping for 5% off VAT on beer. When he [Rishi Sunak] said 15%, the old heart jumps and then he said it was food, which is seriously disappointing.

“I know they are protecting the hospitality trade, the restaurants, the takeaways and pubs that do food but there are many, many pubs like me.

“We are not struggling by far to survive because they did give us the grants, and I'm still up on that but thank God they gave us that having just swiped us with not giving us the VAT discount."

No benefit

Madsen added: “I thought they would do something on beer duty and it was surprise that didn’t happen. My heart definitely sank when he didn't include us in that 15% VAT discount.

“That 15% discount really would have helped with the increase in staff I'm going to need for the table service and the lack of trade.”

Madsen outlined how he has made use of the Government support he has received, including the grant but was disappointed to have been left out of the latest measures.

He said: “I've kept my staff and thanks to the grant, I paid them 100% all the way through so they haven't had to suffer at all. I've managed to pay my two VAT bills and anything outstanding with the brewery so at least when I open, it's level ground, I'm not chasing any bills. I will still have a couple of quid in the bank because I haven't spent it all. I'm fortunate I didn't have to.

“I can't believe he didn't include us. There was no benefit whatsoever for us. I wish I was running a restaurant now.

“What was so disappointing for me was I was looking forward and actually thought he [Sunak] was going to drop VAT to 15% and he has dropped it to 5% but if he had dropped it to 15% he could have done it across the board and benefited everybody because 5% drop is still worth having in your pocket.

“Especially when you're not discounting beer duty either. All the breweries will be struggling, the smaller breweries could have done with that.”

British Beer & Pub Association chief executive Emma McClarkin while the measures announced will help food-led pubs, those who just serve beer may feel they are left wanting.

She added: “The pub and brewing sector has huge potential to create thousands of new jobs and employ more people, but to do this it needs to be thriving, not just surviving.

“This will require more support in the medium term directed at all pubs and brewers so they can help lead with the economic recovery.

“These measures include a significant cut to beer duty to bring the UK in line with other European countries who pay far less tax on beer, and a fundamental review of the business rates system so that pubs no longer pay an unfair share of them.”

No direct support

While Campaign for Real Ale (CAMRA) chief executive Tom Stainer welcomed the announcement, he also expressed concerned about the pubs left behind.

He said: “While a six-month cut in VAT for food served in pubs and the Eat Out to Help Out​ voucher scheme in August is welcomed, we are concerned that pubs have been left behind by the Chancellor’s statement, which contained little support for community pubs. 

“It is also disappointing to see no direct support for independent brewers and producers, who will not benefit from a VAT cut that specifically excludes beer and cider. 

“CAMRA will continue to campaign for greater support for all pubs - including those that don’t serve food. We are calling for long-term support measures – business rate reform and a tax reduction for draught beer – to encourage people back to the supervised setting of the community pub. 

“Lockdown has shown just how valuable our pubs are to local communities and the pivotal role they play in tackling loneliness and social isolation. It is absolutely right that they receive extra support during the difficult months ahead to ensure their continued survival.”

The Society of Independent Brewers (SIBA) chief executive James Calder labelled the announcement as a “mixed picture”.

He said: “The Job Retention Bonus and Kickstart Scheme will help beer, brewing and pubs, given we employ a disproportionate number of young people.

“The temporary VAT cut to 5% and Eat Out to Help Out ​scheme will help encourage people back into the pub but we are very disappointed that beer, the UK’s national drink, has been excluded from the VAT cut and the eating out scheme.”

He went on to outline how the measures “do nothing to help small, wet-led community pubs and independent craft breweries”.

Calder added: “Treasury has confirmed with us that the long-awaited announcements on Small Breweries Relief reform and the wider review of alcohol duties have been delayed again, until such a time that the Chancellor and his team can examine the issues in greater detail.

“Given the Covid earthquake that has hit the brewing industry we need a tax system that does what the Chancellor set out to do for the whole economy: to protect jobs and to enable us to bounce back.

“The only way that can happen is to reduce the overall tax burden, protect the relief for the smallest breweries and incentivise growth. We look forward to working with the Chancellor on the future of independent brewing in Britain.”