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  1. Spotlight on Policy
20 September 2019updated 09 Sep 2021 1:21pm

Protecting the Great British Pub

What contribution can pubs make to the wider economy?

By David Cunningham

Public houses, or more affectionately, pubs, are community assets. They are places for people to meet, eat, drink and simply spend time together. They are sources for all levels of employment, from part-time and seasonal work for students to high-end management positions within the hospitality trade.

Britain’s pubs employ some 600,000 staff nationwide with nearly half of those people under the age of 25. And the British brewing industry is a key exporter, shipping out over a billion pints of beer to 110 countries in 2017-18, worth roughly £600m to the overall economy. Together the pub and brewing sector contributes £23bn to our national GDP.

Pubs are a big part of British culture. A study by the Office for National Statistics found that the majority of tourists travelling to Britain listed a visit to a pub among their top three priorities during their stay. Yet despite playing such a central role in many people’s lives – a survey carried out by the British Beer and Pub Association (BBPA) found that 15m people in Britain visit a pub on a weekly basis – the futures of our locals are uncertain. Over the last three years, nearly 3,200 pubs have closed their doors for good – that’s three local pubs every day.

One in three pounds spent in British pubs goes to the taxman and the average British pub’s tax bill is around £140,000 per annum, with the main contributions to this figure being beer duty, business rates and VAT. In fact, beer duty in the UK (54p per pint with a 5 per cent abv) is 11 times higher than the rate in Germany. And, as it stands, it is planned to rise at the rate of Retail Price Index inflation year-on-year.

The Beer Duty Escalator between 2008-12 saw a rise in beer duty by 42 per cent in Britain, leading to a 16 per cent dip in beer sales, 5,000 pub closures and 58,000 jobs being lost. Inflationary increases are built in to Treasury plans, so any freeze or cut in beer duty will only come from political intervention by Treasury ministers in response to pressure from the public and publicans.

Pubs make a crucial contribution to Britain, from an economic, social and even public health perspective. Ruth Smeeth, the Labour MP for Stoke-on-Trent North, suggests that pubs can provide part of the solution to the loneliness epidemic. She says: “The benefits that pubs bring to society really are immeasurable. Pubs are the heart of many of our local communities and important places for people to come together. The role pubs play today in social cohesion and combating societal issues like loneliness is incredibly important.”

Through its support for the Long Live The Local campaign, the BBPA is urging policymakers to recognise the value in pubs and be proactive in supporting them. Of course, supporting pubs should not be viewed within the contexts of the beer and pub industries alone. As the BBPA’s CEO Brigid Simmonds points out, “with consumer spending on the high street down and many people choosing to do their shopping online instead”, British pubs have adopted greater value in complementing tourism offerings and keeping trade going in town and city centres. She adds that pubs have a “key role to play in the future success of the high street” and highlights the “cost pressures from a range of sources, particularly high beer duty, unfair business rates and VAT” as some of the major challenges they face.

Outside of urban areas, pubs arguably play an even more important role in supporting communities. As more local shops and libraries, for example, continue to close, pubs have started to serve a range of purposes, beyond simply being a place to have a drink. Sara Barton, founder of the award-winning Brewster’s Brewery and owner of the Marquis of Granby pub on the outskirts of Bingham in Nottinghamshire, explains: “My pub is very important to the locals but have to adapt to ensure we meet the needs of the community we serve. We are currently refurbishing our pub to include a shop and tea room as the village no longer has either. Pubs in the UK need a fairer tax regime to enable us to invest and provide the vital place and services that communities need.”

As well as from a domestic perspective, the brewing industry in Britain needs to be supported with international ambitions in mind. Foreign brewers must be encouraged to continue to base themselves in Britain through constructive policymaking. It should be noted that over 80 per cent of the beer brewed in Britain is consumed here, too.

The British pub is one of this country’s core institutions; some might even call it the original social network. Britain’s Beer Alliance – an alliance of pubs, brewers and industry bodies including the BBPA – is not arguing for brewers and pubs to not pay their fair share of tax, but rather for the government to recognise that in continuing to impose high taxes, it would be compromising the economic, social and cultural value of these community assets.

Pubs and brewers pay £13bn a year in tax, with £3.5bn paid in beer duty alone. If beer duty remains punitively high, with seven in every ten alcoholic drinks sold being beer, pubs will be under pressure to pass it on through the value chain to the price presented to the consumer. This would increase the differential price between beer sold in pubs compared to beer sold in supermarkets and likely lead to a decrease footfall, and in the worst-case scenario, a loss of revenue that could cause a closure.

Ashley McCarthy, landlord of Ye Olde Sun Inn in Colton, says: “Pubs like ours face a wide range of pressures but none greater than the taxes I have to pay. With ever-increasing beer duty and business rates, we are faced with either passing on the price to our customers, risking fewer visits and falling revenue, or we have to reduce our margins meaning that we have less money to re-invest into the pub, events, training and staffing.”

Britain’s Beer Alliance wants to see positive steps taken by the government to ensure pubs are protected and supported, to help them modernise and adapt to the needs of the communities they serve. Whether they are to become the showpiece of town and city centres of the future against the backdrop of the growing experience-led economy, or the multi-functional hubs of rural Britain, pubs need to be given a fighting chance. They need to be able to invest in themselves. Better pubs and a well-supported brewing industry, make no mistake, will help Britain to thrive.

David Cunningham is programme director of the Long Live the Local campaign.

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