The economic downturn has meant that people have reassessed how they spend their free time and money. They rightly expect a first class pub experience when they visit their local.
Publicans are working harder than ever to offer great pub lunches, breakfasts and morning coffee, meeting spaces and parties as well as midweek sport. However, consumer change is not the only pressure on the horizon for publicans.
The British Beer and Pub Association recently released research showing that pubs carry a total tax bill of £7.3bn, or £140,000 for every pub. That’s 34p in every pound of turnover. The report revealed that pubs pay the second highest business rates of 67 sectors.
The situation was exacerbated last year by the news that the Chancellor would not be extending retail relief for another year. That was effectively a £1,500 tax increase for the majority of pubs and will be adding £46m to pubs’ rates bills. Retail relief provided a discount for pubs with a rateable value of £50,000 or less. Around 75% of all pubs were eligible. This has created a particular problem in the run-up to the revaluation next year, as rates bills have become out of step with the value of individual businesses.
Another policy decision at the forefront of all our minds is the new National Living Wage. From 1 April this year, all workers aged 25 and over will have to be paid at least £7.20 per hour. On paper this is a great initiative and we know more than most how vital it is that proper payment and upskilling continues in our industry.
Finding and improving talent is always a good thing, but this will have a huge impact on costs for anyone operating bars, pubs and clubs. It’s estimated that employers will have to find an additional £1.1bn for wages just in 2016. And by 2020 the hospitality industry as a whole will see its total wage bill go up by 3.4%.
These are just a few of the headwinds facing the industry. With these changes on the horizon it is more important than ever to take action where we can. The Government takes 52p in beer duty for every pint sold – 12 times more than in Germany. We pay the second highest duty rate in the EU. That is why we’re supporting the BBPA’s beer duty campaign to ask the Chancellor take a 1p off a pint in his next Budget on 16 March.
By working together we have now had an unprecedented hat trick of beer duty cuts from the Chancellor. This has cut 3p off a pint since 2013. This might not seem a lot, but reductions need to be seen against the old policy which saw year on year above inflation increases.
We have momentum on our side. Interest in beer and pubs has never been stronger. In the last three years we have invested £58m to safeguard the great British pub. We are working in partnership with our licensees to improve their pubs for the consumers they serve.
I’ve worked in this industry for over 25 years, and I am confident that we can continue to work together to keep Britain’s pubs great.
Lawson Mountstevens is managing director at Star Pubs & Bars