Pub openings worth £203.5m to the treasury
21st November 2008, 10:40am
The Association of Licensed Multiple Retailers (ALMR) is calling on the government to step in and help the struggling pub industry after it released figures showing the worth of pub openings to the treasury.
Since December 2006 there has been a 75% drop in new pub openings. According to ALMR research, if that trend was reversed those new outlets would generate an extra £155,000 each per year - £203.5m in total - for the Exchequer.
The Chancellor is expecting to raise an additional £505m through the alcohol duty escalator next year (2009-10). Half of this will be derived from pubs and bars.
The ALMR is therefore urging the government to capitalise on the pub industry's potential and adopt measures to encourage entrepreneurship in the sector.
ALMR Chief Executive Nick Bish explains why now is the time to act: "The Government's alcohol duty escalator has created a nasty financial hangover for Britain's struggling pubs. All the evidence shows that the alcohol duty escalator disproportionately affects bars and pubs, to the advantage of supermarkets offering bargain basement offers that fuel the very type of irresponsible drinking the Government claims the duty hikes will stop.
"Our industry is not here as a piggy bank to be raided every time Mr. Darling can't make his sums add up. We need positive, innovative thinking – not crude smash and grab raids. If we could get back to the number of openings we had just last year, then the Chancellor could be raising the revenue he wants."
Alongside the figures, and as part of its Pubs Manifesto, ALMR is publishing a series of proposals that would help to boost pub opening figures and count as the first steps towards securing a sustainable future for Britain's pub industry.
Bish continues: "There is action that could be taken right here, right now that would reduce the burden on pubs and increase new openings. That action is outlined in our Pubs Manifesto. Openings are not just in our own interest. A viable, profitable pub industry creates jobs, delivers a great service to the public, encourages more responsible drinking and also provides a sustainable revenue stream for the Treasury."
The Manifesto proposes action in the following areas:
Stop the alcohol duty escalator. In his 2008 Budget speech, Alistair Darling justified the alcohol duty escalator on the grounds that "if you go into a supermarket today, the average bottle of wine will cost about £4." With supermarkets telling their suppliers to absorb the duty increase, this measure has had no impact on off-trade prices.
The measure has hit Britain's pubs and bars, who have been forced in pass on the increase in full - making on-trade prices even cheaper and drinking at home a better deal. Small wonder that pubs are closing at a record rate – 34 per week, up from just 2 a week between 2000 and 2005. Pubs and bars contribute some 71% more per pint of beer to the Treasury's coffers than off-licences, so it is the Exchequer which loses out as a result.
Business tax reform. Taxation can be a matter of life and death for pubs. ALMR believes that the Government should scrap its planned corporation tax increase for small businesses. A freeze in the current rate, or even a cut, would encourage more people to set up small businesses, including pubs and bars, attracting new talent to the sector.
The abolition of 50% Empty Property Relief in the last Budget has contributed to many pubs closing this year. The removal of this financial lifeline has meant that companies now cannot afford to have empty outlets on their hands. It is now cheaper to close an outlet than to keep it going until it can be re-let. The reintroduction of relief would offer a financial lifeline to many businesses.
Ban on below cost selling. As part of a Pre-Budget Report review of the alcohol duty escalator,
ALMR believes that this targeted proposal would restrict deals offered by supermarkets. Selling alcohol at playground prices is increasingly being recognized by MPs and the police as contributing to pre-loading and under age drinking.
Cut red tape. ALMR believes that there are three steps that the Department of Culture, Media and Sport could take tomorrow to help Britain's pubs and bars, who are drowning in a sea of red tape. In 2007 the Independent Fees Review panel recommended that a move to a common payment date for all annual licensing fees, simplified licence advertising requirements and the introduction of an electronic application system for licences could save the trade an estimated additional £20-25 million each year. DCMS has confirmed that these changes are simply awaiting ministerial sign off.
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