Budget reaction: Pub industry slams ‘regressive’ and punishing hikes

Claire Dodd

Claire Dodd

09 March 2017

The pub industry has continued to react angrily and widely denounce measures introduced in yesterday’s budget.

Though chancellor Philip Hammond announced a number of measures aimed at reducing the burden of business rates increases, he failed to reduce or even freeze drinks duty, instead announcing that beer, cider, wine and spirits will increase by RPI inflation. The move will see prices rise by 3.9% from 13 March.

The pub industry has been quick to label the move as ‘out of touch’, ‘a step backwards’ and punishing to business that have invested in jobs and people. While Hammond’s seeming compromise on soaring rates has been criticised by many in the trade, as failing to help businesses hit by the steepest increases.

Simon Emeny, chief executive of Fuller’s, said: 'This budget falls short and fails companies like Fuller’s that have invested in pubs in the South East. While a handful of our tenants will be better off, which will be welcome, the company is still left to pick up a £2 million penalty by way of an increase in our business rates for creating jobs and investing in the fabric of London pubs.

The UK already has the second highest beer duty rate in the EU. Rather than raising it further the government should be cutting duty to support investment, create jobs and support pubs,

David Forde, BBPA

‘On top of this, we are also faced with an increase in beer duty – adding unwanted cost pressure to a sector that is in decline and penalising a product which, in our case, is almost wholly produced from British ingredients. This is a vicious circle of the worst kind.’

David Forde, managing director of Heineken and chair of the BBPA, said: ‘There’s no doubt this is an expensive and disappointing budget for beer drinkers and pubs. The government has hiked duty by 3.9% and pub landlords won’t take long to realise that outweighs support to mitigate business rate rises.'

Wetherspoon founder and chairman Tim Martin was slightly more positive. He said: ‘[It’s] a good move as far as it goes and we’re grateful as long as there are no stealth taxes which go the other way. But if pubs are to stay open we need business rates and VAT equality with supermarkets for long term survival.’

A statement issued by Punch Taverns said it welcomed the announcement by the chancellor of £1,000 relief for pubs with a rateable value less than £100,000, the discretionary relief fund available to local authorities and the wider review of the business rates system to ensure the rates burden is shared more fairly.

'Support in this area has been needed and campaigned for, and it is good to see that our industry’s one voice has been heard,' it said. However, it said the inflationary duty rise on beer and cider was 'disappointing' and 'only goes to increase the significant tax burden on UK pubs' at a time when re-investment is needed.

Of course, smaller pubs, such as those in rural areas, will benefit. However, those are not the pubs that we have invested over £40m in acquiring and redeveloping,

Peter Borg-Neal

Peter Borg-Neal, CEO of the 18-strong Oakman Inns, said while the sector-specific reliefs announced by the chancellor will bring some small benefit to thousands of pubs it will be of little use to Oakman Inns.

‘Specifically, it means that the proposed pre-budget 45% increase in costs, becomes an increase of somewhere between 43 and 44% which is, by any measure, simply unjustifiable,' he added. 'Of course, smaller pubs, such as those in rural areas, will benefit. However, those are not the pubs that we have invested over £40m in acquiring and redeveloping. Those are not the pubs that are generating employment growth – we now employ over 500 people.

‘This ‘relief’ does nothing to lessen the impact of this ridiculous and unfair system. The result of the increase in Business Rates will inevitably reduce our profits and, consequently, our ability to raise further investment funds through bank debt. This has an immediate impact as we will now open two fewer pubs in the coming financial year'.

‘I feel that Oakman is being punished for investing more money, creating more jobs, training more staff to have good careers and trying to support the communities we serve,'  Borg-Neal added. 'Because we have worked hard to modernise the old concepts of the old-fashioned boozer or some high-street bars who have lower sales and much lower costs, we are paying the price. This ridiculous, regressive tax encourages the wrong type of business and we are disappointed and outraged by this lack of basic financial common-sense.’

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