Tim Martin

Tim Martin urges change for the UK pub and restaurant industry

10th September 2010, 9:56am

Tim Martin, chairman of high street pub chain JD Wetherspoon speaks out about the government, entrapment, taxes and why supermarkets are treated differently…

The biggest danger to the pub and catering industry is a continued increase in taxes and regulations. It is to be hoped that the UK government's attitude towards pubs, in particular, changes and that a co-operative and helpful, rather than a punitive, approach is adopted.

In the last financial year the Company was responsible for approximately £400 million of tax payments of one type or another, including VAT, excise duty on alcoholic drinks, employment and property taxes. The previous government adopted an approach of increasing taxes and regulations for pubs, greatly increasing the costs of running these businesses. Since the provision of a pint in a pub is far more labour intensive than a pint purchased in a supermarket, the effect of many of these taxes and regulations has been far greater for pubs than for supermarkets or other off-licensed premises.

Much of the legislation aimed at controlling excessive consumption of alcohol has been aimed at pubs, since alcoholic products purchased in supermarkets are consumed elsewhere, so this aspect of regulation causes great expense for pubs, which is often unproductive, and virtually none for supermarkets.

It is also clear that much of the legislation which has caused extreme hardship for publicans and their staff has really amounted to little more than a public relations stunt. For example, police officers have been required to recruit 15 and 16-year-olds in schools and they are paid to go to pubs, under police supervision, to try and buy drinks. This sort of "entrapment" is prohibited in most areas of the law, but has been zealously pursued against licensed premises.

The problem with this sort of legislation is that it is hypocritical in the extreme, and counter-productive. Almost all adults started drinking in pubs, as most will admit, at about the age of 15 or 16. Many also permit their children of 15 or 16 year olds to go to pubs, usually preferring the supervised drinking circumstances, incorporating mixed age groups, found in pubs compared to the unsupervised drinking environments of parties, streets and parks.

The net result of the previous government's policy of increased taxes and regulations affecting the pub industry has been the closure of many pubs, often, but not always, in rural areas and villages, with consequent damaging effects on the social life of these communities.

In addition, the government's policies have resulted in pub consumption being replaced mainly by supermarket sales, resulting in a higher level of unsupervised drinking, and significantly lower taxes for the government. Lower taxes are a result of the fact that the average price of a pint in a pub is now over £2.50 and the tax payable, from the various taxes referred to above, is at least £1 per pint. In contrast, taxes, including VAT, are only about half that amount on a pint purchased from a supermarket, due to the lower VAT, but also to the lower impact of property and employment taxes. As alcohol consumption in pubs has declined sharply and off-sales have increased, alcohol related problems have worsened, which suggests that pub consumption is preferable to off-sales.

Unfortunately, the present government seems determined to proceed on the same path as the last government, especially in regard to legislation impacting pubs. The police are to be given further powers to close pubs, even though such powers seem not to have been requested by them. The authorities currently have ample powers for dealing with the relevant issues. In addition a draconian reduction of the ability of pubs to appeal in a number of important circumstances and a late night levy, in effect another tax on pubs, are proposed. In France, which many Britons like to believe has more restrictions and regulations which adversely affect business, VAT on food served in bars and restaurants has been reduced to 5.5%, and early evidence suggests that more tax has been levied by the French government as a result through, job creation, greater income tax, increased salaries for employees and increased corporation tax.

Serious UK governmental thought is required to reverse the trend towards job and social destruction resulting from a continuation of the policies of the previous government. In particular, if the UK government wishes to maximise jobs and tax from the pub and restaurant industry, the tax paid by pubs and restaurants should be more fairly equated with the tax paid by supermarkets.

Related Articles:

• 20 Oct 2010 - Wetherspoon launches 'personal menus' for diners with dietary requirements
• 14 Oct 2010 - JD Wetherspoon loses finance director and chief operating officer
• 10 Sep 2010 - JD Wetherspoon celebrates record results as it warns government on taxes

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