Saving rural pubs
How much are you prepared to pay for a pint, and do you think village pubs are an essential part of rural life?
Changing social habits mean beers sales and the number of village pubs have been declining for decades. But now things are particularly bad. The costs of raw materials have increased. So too has duty, which is set to increase further.
And now the recession will make things worse.
Rural Services Network – February 2009
The latest figures published by the British Beer and Pub Association are staggering:
• A net loss of 13 pubs every week (a 1.5% decrease) in rural areas, during the last six months of 2008
• Nationally, seven times as many pubs closed in 2007 as in 2006
• One in eight pubs are predicted to close by 2012.
Partly, we must blame ourselves. More and more of us are drinking at home rather than down the local – and not just beer. As a result, sales of beer in pubs, which account for 55% of total sales, have been decreasing by 2%-4% per annum for over a decade, and by 4%-9% during the last two years.
Cut price alcohol
Meanwhile, sales through the off licences and supermarkets have been increasing by 2%-9% per annum. Customers are being offered massive discounts to buy from supermarkets, where beer is sold for as cheap as 50p a pint, compared to £2-£2.50 in pubs.
Indeed, an investigation by the Competition Commission in 2007 concluded that stores were selling alcohol at a loss in order to encourage customers through their doors.
The government is also to blame, for using duty on beer and other alcohol as a revenue earner. According to the BBPA, whose members own nearly two-thirds of Britain’s 57,000 pubs, the combined effects of VAT and duty on a pint of beer is 91p in the pub trade and virtually half that, 53p, on beer sold elsewhere. (No VAT is paid on sales through supermarkets.)
And the impact of duty is set to increase. In his pre-Budget report last year the Chancellor, Alistair Darling, announced that duty on beer would increase by more than the rate of inflation (a ‘tax escalator’) each year up until 2012 – and this follows the 17% increase in tax on beer during 2008.
Small is beautiful?
Down the pub, regulars are arguing about the merits of large pub companies (pubcos) such as Enterprise Inns and Punch Taverns, each of which own around 7500 pubs.
On the plus side, they can bring financial stability and extra resources to help support a landlord, and help keep a pub open through seasonal and other short-term declines in sales.
But in return for their long-term lease and favourable rents, they are only allowed to serve an agreed list of drinks – and this usually omits real ales, which is not what gives pubs their edge and what pub regulars and enthusiasts are looking for.
In truth, there are different markets for beer and we probably need both tied pubs and free houses. Some people want a cheap drink; others want a choice of real ales.
Another divisive issue is whether the smoking ban, introduced in July 2007, has helped or hindered the industry. To date, there is no firm evidence either way – but evidence of health benefits in Scotland, where the ban was introduced 15 months earlier.
In response to the crisis, the Campaign for Real Ale has launched a new campaign, Save our Pubs, that provides resources, a discussion forum, and information to support local campaign activities.
Individual councils such as South Norfolk are also taking action.
“It is not just jobs, but the community aspect to pubs that is particularly important to us,” says one of its councillors, Keith Weeks.
And with the budget approaching, CAMRA and the BBPA are lobbying the government with the following suggestions:
• Stop the planned tax escalator
• Institute a better balance between pubs and supermarkets – prevent the latter from selling at a loss, or reform laws so that the pub trade can compete more effectively
• Amend rate relief legislation – allowing councils to give relief to pubs
• Halt the forthcoming mandatory code of practice, which BBPA says will impose additional costs.
“The government has been listening, now is the time for action,” says Mark Hastings, director of communications at BBPA. “We are in one of the deepest, and deepening, recessions. It is important that the government do not make a hard time worse with more tax and regulation.”
© Robert Bullard. Not for reproduction without prior permission