Campaign for Pubs
Chancellor must act to help pubs survive the ‘perfect storm of the cost-of-living crisis
The Campaign has written to the Chancellor urging the Government to understand the serious threat to pubs, who are now facing a perfect storm of dramatically rising costs, especially energy costs and at the same time, many customers having to reduce their own spending.
UK’s pubs have faced their most difficult time ever in the last two years, with lockdowns and restrictions as trade was decimated by the Covid-19 pandemic. This has left many publicans with considerable levels of debt which can only be paid off if they are able to sustain good levels of turnover. Yet just when publicans thought that finally they could trade profitably and recover, pubs are hit with the cost-of-living crisis and especially, with unaffordable and unsustainable energy costs.
Costs for pubs, especially energy and product costs, have risen, and continue to rise, very significantly. If no action is taken regarding the astronomical rise in energy bills, many otherwise profitable pubs will find that these huge percentage increases, on top of ongoing debt repayments, could mean a considerable number of pubs simply cannot stay afloat. Costs for brewers and other producers are also increasing. As well as the cost issues, some energy companies are now refusing to even supply pubs.
At the same time, consumers are facing rising prices and reduced disposable income, which means that some will have to reduce expenditure on non-essential items, including going to the pub. This is exacerbated by the fact that pubs will have to pass on at least some of the rising costs faced by brewers and other suppliers, making visits even less affordable to those on lower and middle incomes.
Meaningful, direct and properly targeted support is needed and the Campaign for Pubs is calling on the Chancellor to support all pubs, including ‘wet-led’ pubs, not just those pubs that serve food and offer overnight accommodation. Some Government Covid-19 support has unfairly excluded ‘wet-led’, community-orientated pubs that need help most of all. Yet at the same time, huge global food chains, who continue to make enormous profits and whose restaurants are not at risk, have benefited to the tune of millions of pounds, which is a poor use of taxpayer’s money.
Small brewers and producers have also been hit by the pandemic and some are also at risk from the cost-of-living crisis, so the Campaign for Pubs is also calling for support for small brewers and producers in the Spring Statement.
The Campaign for Pubs is calling on the Chancellor to announce:
- VAT of 5% on all pub/on-trade sales for a minimum of 12 months to benefit all pubs, including smaller wet-led pubs who need help most, not just those that sell food (or provide overnight accommodation).
- Reduce the Flat Rate for VAT – this was reduced at the same time as the rate on food, but it has returned to normal rate now. It is essential that it is now reduced again.
- Extension of zero business rates for the next fiscal year & a revision for 2023/24 to increase the multiplier for hospitality to reduce rates, along with an increase in the threshold of zero rates to £20,000, also for rural rate relief. (In the longer term it is still absolutely vital that there is a complete overhaul of the unfair and unique way in which business rates for pubs are calculated.)
- Extend the domestic gas and electricity cap to small businesses (including businesses like many pubs that are joint residential and commercial premises). This is vital, or many small businesses – including pubs – will soon be forced out of business by spiralling energy costs.
- Extend business rates relief to small brewers and producers and other pub suppliers, whose businesses are seriously threatened by the cost-of-living crisis.
- Draught duty relief should apply to all draught beer. The Campaign for Pubs does not believe that there should be any limit on container size, but reducing it to 20 litres is essential as this would mean that smaller containers used by many smaller brewers/producers (and pubs) would be covered.
These measures would give pubs and publicans the chance to get through the cost-of-living crisis, continue to pay off Covid debts and ensure they are able to continue to serve their communities.
Dawn Hopkins, Vice-Chair of the Campaign for Pubs and a licensee in Norwich said:
“Publicans and small brewers who made it through the lockdowns and restrictions, and who were hoping to rebuild their businesses, now face a double whammy with the cost-of-living crisis. Not only are our own costs rising and becoming crippling, but our customers’ disposable income is being squeezed to the limit too.
“Without targeted government support in the form of VAT cuts, the extension of business rates relief & a cap on business energy prices there will be no recovery in our sector. Our publicans have made it through so much, but this crisis could see many, many pubs and small breweries close for good”.
Paul Crossman, Chair of the Campaign for Pubs and a publican in York said:
“Pubs have had it tough for many years, even before the pandemic, but the new economic reality is worse than could ever have been predicted.
“Rapidly spiralling supply costs combined with a cost of living crisis that will impact on public leisure spend are a perfect storm that will leave many publicans despairing for their livelihood, and many communities facing the prospect of losing their beloved social hub.
“Long term action is needed more than ever to reform the pub sector into a fair and open market and to properly protect our irreplaceable pubs in planning law, but for now it is crucial that the Chancellor uses his Spring Statement to bring forward targeted measures such as the ones we have laid out, in order to protect and preserve the often small businesses that actually run the pubs that are so vital to our communities and culture”.