Local pubs deliver invaluable socio-economic value, ministers must act to save them – new report urges

The government must overhaul a counterproductive regulatory and tax landscape that threatens the future of the ever-popular British local pub as a vital social and economic anchor for communities across the country, a study published by the think-tank Localis today warns.

In a report issued today at the Labour Party Conference in Liverpool entitled ‘Inn-Valuable 2: unlocking the socio-economic potential of our nation’s pubs’, Localis urges the government to launch a taskforce to clear obstacles that endanger the beer and pub sector which cumulatively supports more than one million jobs, generates £34.3bn in GVA to the economy and delivers £11.4bn in tax revenues to the Exchequer annually.

According to polling undertaken by YouGov for the report, 72% of people felt the impact of pubs to community life to be positive. When asked if pubs are important in bringing people together, over four-in-five (81%) of British adults agreed they are, with just 14% feeling they are not.

Polling undertaken for the report showed nearly three quarters (73%) of British adults felt pubs can help combat loneliness in their local area. 

Among pro-community activities supported by local pubs, almost half (42%) of people were aware of pub events that bring the community together, over a quarter (27%) knew of local pubs that supported charitable causes and close to one in five, 19%, knew of local pubs that supported vulnerable people in their local area.

The research identified from case studies taken pubs across the country some dominant themes on how the sector supports local people and communities, namely by:

combatting isolation

supporting local causes

bringing local business together

keeping prices down so pubs remain accessible social spaces for communities.

Pollsters also learned among those who’ve ever visited a pub more than half (53%) had met a friend in one, while nearly two-in-five (38%) of people had visited the pub to meet up with family members, a quarter (26%) had enjoyed Sunday lunch in one and 11% of the public had attended a pub-held birthday party in that timespan. Also, 7% of the public had used pubs for dating purposes and 20% watched a sporting event in a pub.

A key recommendation of the report calls for short-term support by extending business rates relief for the hospitality industry and to increasing the window for this to three years in line with the spending review period to give long-term certainty to pub landlords.

The report authors also call for a government taskforce to arrest the decline of the Great British pub which would identify policies to ensure long-term sustainability for the sector, including:

reviewing business rates and excise duty;

providing employment incentives so pubs keep employing younger members of staff;

examining planning policies to support the night-time economy and preserving the role of local pubs as social, cultural and economic anchors in our towns and villages.

Report author and Localis head of research, Joe Fyans, said: “Pubs are more than just businesses; they are the heart and soul of our communities.

“To ensure their long-term survival, we need a policy framework that recognises their value and supports their continued success."

Emma McClarkin, CEO of the British Beer and Pub Association, added: “This research cements what people up and down the country know and believe – that the pub is a home from home, the beating heart of our towns and villages, and offers a warm welcome to people from all walks of life.

“As this research proves, pubs aren’t just about a pint – people know that pubs stave off loneliness, support the vulnerable in their communities, and raise millions for charity.

“While we know brewers and pubs invest billions into the economy, their huge contribution to our communities and society is priceless and they must be supported.

“Government must use this Budget to cut beer duty, reform business rates, and maintain 75% business rates relief so that pubs and brewers can remain a cherished part of society.”

https://www.localis.org.uk

Wetherspoon's Tim Martin Cuts Food and Drink Prices to Highlight Tax Inequality Between Pubs and Supermarkets

In a bold move to raise awareness about the tax imbalance between pubs and supermarkets, Tim Martin, the founder and chairman of JD Wetherspoon, has announced a significant reduction in food and drink prices across his pub chain. 

This initiative is designed to spotlight the growing disparity in tax obligations that heavily burden pubs while giving supermarkets a competitive edge.

The Tax Inequality

The crux of Martin’s argument lies in the VAT (Value Added Tax) rate. In the UK, pubs and restaurants are required to charge 20% VAT on food and drink sold for immediate consumption. In contrast, supermarkets pay little to no VAT on food sales, making their products considerably cheaper in comparison. This difference has created what many in the hospitality industry consider an uneven playing field.

By slashing prices in Wetherspoon pubs for a limited time, Martin aims to illustrate how pubs could offer lower prices to customers if they were subject to the same tax regime as supermarkets.

The Impact on the Pub Industry

The disparity in VAT charges is a long-standing issue that many publicans have been vocal about. Pubs have struggled in recent years due to rising costs, shifts in consumer behaviour, and the devastating impact of the COVID-19 pandemic. Lockdowns and restrictions dealt a heavy blow to the sector, with many pubs closing their doors permanently.

The reduction in VAT for hospitality during the pandemic gave temporary relief, but since the return to the standard 20% rate, pub owners have once again found themselves at a disadvantage. Supermarkets, on the other hand, thrived during the pandemic, as more people bought food and drink to consume at home. Their ability to sell alcohol and food without the same VAT burden has contributed to the gradual erosion of foot traffic in pubs.

The Message Behind the Price Cuts

For Tim Martin, this price reduction is more than a publicity stunt; it’s a call to action for the government to rethink its tax policies. Wetherspoon’s move is meant to show customers how much more affordable pub prices could be if they were taxed more fairly.

By highlighting this imbalance, Martin hopes to rally both the public and policymakers to reconsider the VAT structure. He believes that levelling the playing field could not only save pubs but also revitalize local communities. Pubs are more than just places to eat and drink; they are social hubs, often serving as the heart of small towns and villages. If pubs were able to compete more effectively with supermarkets, Martin argues, it would benefit the hospitality sector, local economies, and British culture.

The Road Ahead

The broader conversation about tax fairness is one that’s not likely to disappear anytime soon. Martin’s latest move adds fuel to a growing debate about how the government can support local businesses, particularly those in the hospitality sector.

With inflation still a major concern for British consumers and businesses alike, any potential changes to tax policies will require careful consideration. However, if Martin’s price cut campaign succeeds in drawing attention to the issue, it may pressure the government to take action.

In the meantime, customers at Wetherspoon’s will enjoy cheaper food and drink prices—albeit temporarily—while gaining a clearer understanding of the challenges pubs face in their battle against supermarket giants. Whether this gesture leads to long-term change or not, one thing is certain: Tim Martin is determined to keep the conversation alive.

Conclusion

Tim Martin’s decision to cut prices at Wetherspoon’s is more than just a marketing tactic. It’s a direct challenge to the government to address the tax disparity between pubs and supermarkets. As the hospitality industry continues to recover from the pandemic, this issue remains crucial for the future of pubs and other small businesses. By drawing attention to this imbalance, Martin hopes to spark the reforms needed to protect a vital part of British culture and heritage.

Championing Fairness: Wetherspoon's Tim Martin's Campaign for VAT Equality

Tim Martin, the founder and chairman of JD Wetherspoon, has long been a prominent figure in the British pub industry. Over the years, he has built Wetherspoon’s into one of the most recognisable pub chains in the UK. 

But beyond his business acumen and the success of his pubs, Martin has become a leading advocate for a cause that resonates with many within the hospitality sector: the campaign to equalise VAT between pubs, restaurants, hotels, and supermarkets.

In a country where pubs are more than just places to grab a pint—they are community hubs, social gathering points, and a cherished part of British culture—the importance of ensuring their survival cannot be overstated. 

Yet, the current VAT system places pubs and restaurants at a significant disadvantage compared to supermarkets. While pubs are charged a 20% VAT rate on food and drink sales, supermarkets pay no VAT on food. At all. 

This discrepancy is not only unfair, but it also undermines the viability of the pub industry, particularly in a post-pandemic world where businesses are still fighting and struggling to recover.

Tim Martin’s campaign seeks to address this imbalance by calling for the equalisation of VAT rates across all food and drink sales, regardless of where they are sold. His argument is simple yet compelling: if pubs, restaurants, and hotels were to pay the same VAT rate as supermarkets, they would be on a level playing field, making it easier for them to compete and thrive. This change would not only benefit the hospitality sector but would also be a boon for consumers and the broader economy.

One of the strongest points in Martin’s favour is the potential impact on job creation. Pubs and restaurants are significant employers, especially of young people, and VAT equality would enable these businesses to hire more staff, invest in their premises, and contribute more to the local economy. 

In contrast, supermarkets, which operate with far fewer employees relative to their turnover, would not experience the same level of job creation. By pushing for VAT equality, Martin is advocating for a policy that supports employment and economic growth, particularly in communities where pubs are a vital source of jobs and social cohesion.

Martin's pubs also contribute to the profitability of smaller independent brewers with their twice-yearly real ale festivals and other initiatives including local collaborations, etc.

Moreover, Martin’s campaign highlights a broader issue of fairness. The current VAT system seems to favour large supermarkets, many of which are owned by multinational corporations with vast resources, over small and medium-sized businesses that are often family-owned and deeply embedded in their local communities. 

This disparity in tax treatment not only skews competition but also risks eroding the unique character of British high streets, which are increasingly dominated by chain stores and supermarkets at the expense of independent pubs and restaurants.

Tim Martin has faced his share of criticism, particularly for his outspoken views on other matters, but his campaign for VAT equality is one that deserves widespread support. 

It is a fight for fairness, for the preservation of British pubs, and for a more balanced and equitable tax system that does not disproportionately burden one sector over another. 

By levelling the playing field, we can ensure that pubs, restaurants, and hotels remain vibrant parts of our communities, contributing to the social fabric and economic well-being of the nation.

In conclusion, Tim Martin’s campaign to equalise VAT between pubs, restaurants, hotels, and supermarkets is not just about business; it’s about fairness, community, and the future of the British high street. 

His efforts deserve recognition and support from all who value the role that pubs play in our society. Let us hope that policymakers take heed of his call and move towards a more equitable VAT system that supports the continued success of our cherished pubs and restaurants.

The Unfair Burden: How UK Taxation Penalises Pubs Over Supermarkets

In the United Kingdom, the quintessential pub still holds a cherished place in the hearts of many. Pubs are a cornerstone of community life, a place where friends and family gather, stories are shared, and bonds are strengthened over pints of ale and glasses of wine. 

However, despite their cultural significance, pubs across the nation face a significant and, some might argue, unfair burden when it comes to taxation compared to their retail counterpart. Supermarkets.

The discrepancy in taxation between pubs and supermarkets stems from various factors, including the way each business is structured and the different tax rates they are subject to. Here, we delve into the intricacies of this issue, exploring why it's time for a fairer approach to taxation that supports the survival of these vital community hubs.

VAT Disparity:

Value Added Tax (VAT) is a consumption tax which is levied on goods and services. Currently, pubs in the UK are subject to a 20% VAT rate on most items, including food and drink. In contrast, supermarkets benefit from a reduced VAT rate of 0% on many (essential) food items. This VAT discrepancy places pubs at a distinct disadvantage, as they are unable to compete with supermarkets on price due to the higher tax burden they face.

Business Rates:

Business rates are another significant expense for pubs and retailers alike. However, the way these rates are calculated can disproportionately impact pubs. Business rates for pubs are often calculated based on the property's rental value, which tends to be higher in prime locations. In contrast, supermarkets can benefit from economies of scale and lower rates per square foot due to their larger footprint and often out-of-town locations.

Alcohol Duty:

Pubs heavily rely on the sale of alcoholic beverages as a primary source of revenue. However, the duty on alcohol, including beer, wine, and spirits, places an additional financial strain on pubs. While supermarkets also pay alcohol duty, they can offset this cost through their diverse product offerings and higher sales volumes, whereas pubs are more reliant on alcohol sales and may struggle to absorb the increased costs.

Social Impact:

Beyond the financial implications, the disparity in taxation between pubs and supermarkets has broader social ramifications. Pubs play a vital role in fostering social connections, reducing loneliness, and providing a safe and inclusive environment for communities to come together. By penalizing pubs through unfair taxation, we risk undermining the very fabric of our society and eroding the communal spaces that are integral to our cultural identity.

Addressing the Disparity:

To address the imbalance in taxation between pubs and supermarkets, policymakers must take proactive measures to level the playing field and support the sustainability of pubs. This could include:

Reviewing VAT Rates: Consideration should be given to reducing the VAT rate for pubs or introducing tiered VAT rates based on business size or turnover to alleviate the tax burden on smaller establishments.

Reforming Business Rates: Reforming the business rates system to ensure a fairer and more equitable distribution of tax burdens, taking into account factors such as property size, location, and economic contribution to the community.

Fairer Alcohol Duty: Exploring options to reform alcohol duty to ensure a more equitable distribution of tax burdens across the hospitality sector, taking into account the different business models and revenue streams of pubs and supermarkets.

Recognising Social Value: Acknowledging the social value of pubs and the important role they play in communities by considering alternative metrics beyond purely economic factors when formulating tax policies.

Pubs are not just businesses; they are the lifeblood of our communities, providing a space for social interaction, cultural exchange, and collective belonging. However, the unfair burden of taxation placed on pubs compared to supermarkets threatens their viability and jeopardises the unique social fabric they contribute to. 

It's time for our policymakers to recognise the vital role pubs play in our society and implement fairer taxation policies that support their sustainability and ensure they continue to thrive for generations to come.

One month to go until Alcohol Duty system changes

Today marks one month until the biggest Alcohol Duty reforms in 140 years come into effect.

On 1 August 2023, the Alcohol Duty system will become much simpler, taxing all alcoholic drinks based on their alcohol by volume (ABV).

This replaces the current Alcohol Duty system, which consists of four separate taxes covering beer, cider, spirits, wine and made-wine.

It's aim is to make the system fairer and responsive to new products entering the market as consumer tastes evolve and change.

Small producers, including pubs and restaurants, will benefit from reduced rates on qualifying products, like draught beer and cider.

The new system reflects the government’s commitment to tax simplification, helping to foster the right conditions for businesses to prosper and the economy to grow, which reportedly one of the Prime Minister’s five priorities.

Exchequer Secretary to the Treasury Gareth Davies said: “Because we left the EU we can make certain our alcohol duty system works for us. From next month the whole system will be much simpler, the duty will reflect the strength of the drink.

“We will also protect pubs and brewers with our Brexit Pubs Guarantee keeping Draught Duty down, and a new Small Producer Relief."

Jonathan Athow, Director General of Customer Strategy & Tax Design, HMRC, said: “After listening to feedback from industry, economists, public health groups and many business owners, the new Alcohol Duty system will be based on the founding principle of taxing alcoholic products by strength, ensuring consistency across the board for the first time ever.

“The new system will support the government’s public health objectives and provide extra support to small producers, pubs and the hospitality sector.”

The new system will create six standardised alcohol duty bands across all types of alcoholic products and apply to all individuals and businesses involved in the manufacture, distribution, holding and sale of alcoholic products across the UK.

These reforms will replace and extend the existing Small Brewers Relief with Small Producer Relief. This means all small businesses that produce any alcoholic products with an ABV of less than 8.5% will be eligible for reduced rates on qualifying products, if they produce less than 4,500 hectolitres per year.

To support the hospitality industry, and recognising the vital role played by pubs in our communities, there will also be a reduced rate for draught products, which is known as Draught Relief. This will reduce Alcohol Duty on qualifying beer and cider by 9.2%, and by 23% on qualifying wine-based, spirits-based and other fermented products, sold in on-trade premises such as pubs and restaurants.

The reforms will mean every pint in every pub across the UK will pay less duty than their supermarket equivalent, in line with the government’s Brexit Pubs Guarantee.

To support wine producers and importers in moving to the new method of calculating duty on their products, temporary arrangements will be in place for 18 months from 1 August 2023 until 1 February 2025.

To support innovation and responsible drinking, low strength drinks below 3.5% ABV will be charged at a new lower rate of duty. In making these changes, the government aims to encourage product innovation and ensure the Alcohol Duty system works for business and consumers.

More information on the new Alcohol Duty rates and reliefs can be found on GOV.UK.

Those involved in the production of smaller quantities of alcoholic products, can check the reduced rates of duty that apply to them by using the Small Producer Relief calculator. HMRC is also running a series of live webinars throughout July 2023 and in the months ahead to further support the alcohol industry through these changes.