Five biggest threats to pub trade: tough times, taxes & Theresa

The next 12 months may be every bit as "challenging" as the past 12 months. The licensee of independent bars Monty's outlines his five biggest threats facing the trade

1. Theresa May.​ Never one to be accused of dithering, Theresa May has announced an astonishingly brief consultation period for her reforms of the licensed sector, and seems determined to bring control of our trade back into her department. But is she really looking for control, or is she preparing to sweeten up the local councils hit so hard by financial restraint during the latest round of cutbacks? While the Daily Mail is happily shouting from the rooftops that the late-night levy will rid our streets of packs of raging youths smashed out of their minds on "all you can drink for a fiver" alcopops, the reality is that this scheme is a licence to print money down at the Town Hall.

Nobody is saying how much this levy will cost, who will set it, or what time we are now expected to consider "late". Many licensees these days open their premises far later than they would like, as customers are now accustomed to the later licensing law and start their nights out a few hours later than they used to. And now your council is rubbing its hands together at the thought of effectively fining you for doing so.

2 Taxation.​ Everyone knows that VAT is soon to be 20%, and the chancellor rather cleverly gave the nation a few months to get used to the idea before it kicks in. But is that really the only tax hike we can expect? Despite continuing pub closures and uncertainty about the global economic climate, we should all prepare ourselves for more alcohol duty rises in the coming months. It's also fair to say that cider should put its tin hat on again. Can you afford to pass on yet more price rises to your customers? Will they stomach these, or will they load up on supermarket booze and knock a pint off their night out to compensate?

3. Supermarkets.​ As effective lobbying machines, the big supermarket chains in Britain are a thing of beauty.

Within hours of the coalition announcing its displeasure at below-cost sales of alcohol, supermarkets were in full swing, offering compromises and deals that should keep them under the reform radar once again, and the media lapped this up. The new Government lapped it up too, and used it as evidence of how seriously they were being taken.

It was all tosh, of course — the reality was that the offer was to ensure the treasury didn't lose out as supermarkets promised not to sell for less than the combined duty and VAT value of the product. Your punters will still be able to buy an armful of beer for a third of the cost of buying it from you.

4. Interest Rates.​ A base rate of 0.5% has been one of the most effective counter measures in the recession. In the early months, as our televisions and newspapers told us all to lock the doors and stay inside or else risk losing everything, it became fashionable to be frugal, and to cut back on non-essential items — such as a social life.

As mortgages began to cost less, and many households noticed that they actually had more — not less — money in their pocket, the feel-good factor started to come back to life, with socialising being one of the areas to benefit. It was once again okay to pop out for a few drinks on a Friday night because the end hadn't come, life went on, and there was money in the kitty.

There is only one direction that rates can go from such a low level, and while the Bank of England has stood firm for an admirable length of time in its belief that the recession is far from over and, therefore, rates should remain on hold, inflation is back. Rising fuel and food prices have begun to impact on the bank's thinking, and before too long the painful decision to act will have to be taken. We know from history that the most powerful weapon in the fight against rising inflation is to raise interest rates, stop the public from spending freely, and tame the beast. When this happens we will all once again be at the mercy of a declining social budget, and could easily see pub closures rocket back to previous levels of 60 a week.

5. You.​ After three years of recession, smoking bans, falling consumer confidence, and sleepless nights spent worrying about the VAT bill or rent, you are more than likely feeling pretty tired by now. The biggest test over the next 12 months is going to be of your resolve and determination to steer your business out of recession and back into growth. Can you stomach another year or two of scratching around for a living on the promise that these conditions can't go on forever?

Have you got the will to convince your customers that staying in is not the new going out? Do you want to sit up all night wondering how to make your bottom line work if you don't pass on all of the VAT increase? Are you ready to stand outside your local Wetherspoons waving a white flag?

Only you know the answer to these questions — and there will also be a lot of you reading this who have done perfectly well in the last couple of years, and are wondering what all the fuss and gloom is about.

The race is only half run. We've lost a lot of competitor pubs along the way — we'll lose a lot more before the finish line is in sight. The question is, will you be one of them?