Leading operators across the pub sector have branded yesterday’s Budget announcements as “derisory” and accused the Government of failing to tackle long-term issues.
Yesterday chancellor Philip Hammond responded to mounting concern over the impact of business rates hikes by introducing a specific £1,000 discount for pubs with a rateable value of less than £100,000. He said it would affect 90% of all pubs.
Operators have accused him of missing an opportunity for a fundamental overhaul of the rates system and have also criticised the decision to increase alcohol duty in line with inflation – the equivalent of a 3.9% rise, or £130m.
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. The Chancellor has missed an opportunity to address the imbalance caused by the outdated business rates system. 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.
“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.”
Punch chief executive Duncan Garrood said: “Punch welcomes 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.
“However, the inflationary duty rise on alcoholic drinks is disappointing, and only goes to increase the significant tax burden on UK pubs. When the Pub and Beer industry has been supported by duty freezes and decreases in preceding years, and when re-investment is needed, this is a step backwards to previous unpopular escalators.”
Greene King chief executive Rooney Anand said: “An alcohol duty inflation rise of over 3% is the first increase in five years and it is disappointing that the Chancellor has started to reverse the good progress that has been made.
“The current business rate system is outdated and unfit for the modern business environment. We urge the Chancellor to deliver a comprehensive plan to reform and rebalance the system. Yesterday’s announcement of a one-year discount for pubs is welcome but will provide limited benefit, particularly given the much larger impact from alcohol duty increases.”
Kevin Georgel, chief executive of Admiral Taverns, said: “We welcome the Chancellor’s much needed intervention and temporary support on business rates. However, we strongly urge him to make this a permanent amendment pending a thorough review of the outdated and punitive business rates system. This system does not reflect the modern economy and places an unfair burden on community pubs up and down the country.
“The increase in beer duty by 3.9% is a disappointment. This is a huge blow to the brewing and pub industry and will see a further increase in taxation on pubs, and pub goers of over £100 million per annum which is especially damaging when Britain’s beer taxes are already three times the EU average. The total level of taxation paid by pubs is now at unprecedented levels at a time when we should be doing all we can to support community pubs.
“We implore the Government to undertake a more holistic review of the tax and regulatory burdens now placed on pubs, which are mainly small businesses located in the heart of their communities. Community pubs play a critical role in bringing people together and providing local employment.”
Young’s chief executive Patrick Dardis professed himself to be “underwhelmed” by the Budget.
He said: “I am pleased that smaller pubs will benefit from a very token help on business rates. As ever, that was immediately negated by the increase on duty. The overall impact is higher costs. Again, no appreciation by the Chancellor of the huge cost burden facing pubs. So, as usual a budget that does little to support pubs.
What I would like to have heard re business rates was the introduction of the Scottish maximum 12.5% (12%) for the leisure/pub sector and a more positive statement of future treatment of rates.
“There was also good news re more powers to the London Mayor and the extra £2bn on social care and the increase on the lower rate and higher rate on tax income is obviously good news.”
City Pub Company chairman Clive Watson said while the £1,000 might be helpful for pubs, it was unlikely to give relief to the burden being felt by operators facing huge business rates rises following a shake-up of the re-evaluations.
He said: “Its obviously better than a kick in the teeth for small pubs, and clearly it’s a headline grabbing situation to say 90% of pubs will benefit
“But from our point of view it is derisory and means we will be facing rises at some of our pubs of 45% this year and 50% the following year. I think it’s pretty unfair really.
“This isn’t business rates, it’s a premises tax on the high street. If you tax business to much you will end up with less businesses on the high street, not just pubs.
“We’ve been absolutely clobbered with no relief whatsoever.
“Can the Conservatives claim to be a pro-business party anymore?”
Peter Borg-Neal, chief executive of Oakman Inns, said the news was little help to his 18-strong group.
He said: “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.”
He added: “Furthermore, the decision to once again delay for the foreseeable future, a ‘root and branch’ review of the business rates system, is deeply disappointing. It displays a woeful lack of understanding of the economic impact that these unplanned and irregularly-timed actions have on businesses of our size.”
Jonathan Neame, chief executive at Shepherd Neame, welcomed the support but called for reform of the system.
He said: “This doesn’t address the largest increases which much of the leisure industry will see in coming months. The fundamental issue is that pubs currently suffer from a tax regime that while fit for the 20th Century, is not for the 21st Century. A thorough review of rates and excise duty is urgently needed.”
Mark Sheehan, of Coffer Corporate Leisure, said: “These concessions are derisory. The Government continues to be short sighted and is penalising business owners already paying substantial overheads.”
Banwell House managing director Toby Brett said the announcement did not solve the wider issues with business rates in the sector.
He said: “The £1,000 will help but it does not rectify the unfair business rates increase and the fact pubs aren’t assessed in the same way as other business. We’re not on a level playing field. It penalises people for being good operators.”
An Ei Group (formerly Enterprise Inns) spokesperson said: “We welcome the Chancellor’s decision on business rates and are pleased he recognises the importance of pubs up and down the country and their role at the heart of local communities.”
Bruce Ray, corporate affairs director for Carlsberg UK, said: “The chancellor’s announcement of a rise in beer tax is disappointing news for all of us involved in brewing and selling beer, and particularly those people who enjoy a glass of beer in the pub.
“Last year’s freeze in beer tax supported investment into the growth and innovation in pubs and breweries – demonstrating the crucial social and economic contribution that our industry makes to the UK. This increase simply risks undoing that good work.
“This year’s increase will be very damaging to an industry which routinely innovates, creates new jobs, and ultimately supports our beer-loving nation.”
The Chancellor said no business losing small business rate relief will see their bill increase next year by more than £50 a month, and the subsequent increases will be capped at either the transitional relief cap or £50 a month, whichever is higher.
He also said he would provide local authorities with a £300m fund to deliver discretionary relief to target individual hard cases in their local areas.
The ALMR has welcomed the Government’s Budget Statement and steps to address business rates inequality for pubs and bars and to promote growth and investment across the UK’s businesses.
ALMR chief executive Kate Nicholls said: “The next step is for the Government to instigate the long term, root and branch reform that is needed for pubs and bars. The Chancellor indicated that the Government will look at more frequent revaluations, something the ALMR has been pushing for, and we look forward to working with him going forward.”
BBPA chief executive Brigid Simmonds, welcomed support for the sector and called for the rates discount to be extended – while criticising the alcohol duty rise.
She said: “We have been very clear with Government that pubs are paying 2.8 per cent of Business Rates, but only generate 0.5 per cent of turnover – an overpayment of £500 million. This very specific acknowledgement that pubs are so important to local communities and are a force for good, is very welcome.
She added “When it comes to beer duty, a return to unpopular beer duty rises, with an extra 2p duty on a pint, is not good news for the British beer industry and in turn pubs.
“Beer tax has now risen by 43% the past ten years. This latest rise will mean 4,000 fewer jobs this year, mostly in pubs. Tax rises on all alcohol will add £125 million to the cost base of pubs.”
Miles Beale, chief executive of the Wine & Spirit Trade Association, said: “It is disappointing that the Chancellor has failed to support a great British industry. He has increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses.
“Between Brexit’s impact on the pound and rising inflation the wine and spirit businesses face a tough trading landscape. This is a missed opportunity to back British business and help out struggling consumers.
“The added uncertainty of another Budget in 6 months’ time is unwelcome and will further undermine business – and consumer - confidence.
“At least there is some sign that Philip Hammond cares about levelling the playing field. It is important that he treated all alcohol products equally. It is welcome news that he has introduced a consultation on wine and made wine between 5.5 – 8.5% - a category which holds a great deal of potential for innovation, especially for lower ABV products.”
