A disappointing summer statement for wet-led pubs
Last week’s summer statement from the Chancellor, Rishi Sunak only offered a partial solution to support the hospitality industry.
The reduction in VAT to 5% and the voucher scheme he announced has handed a massive competitive advantage to those businesses which are “food-led”.
It will target the larger outlets and the chains who operate them, benefitting larger chain restaurants and bigger managed pubs rather than the smaller tenanted and free trade pubs which are more reliant on ‘wet’ sales to generate their cash flow.
The smaller tenanted pubs have far smaller food sales and while those owned by regional brewers were given a true rent holiday during the lockdown, (their rent was cancelled), those owned by the larger pub companies still had to pay all or some of their rent as well as paying a premium on their beer wine and spirit purchases.
The small tenancies and the free trade pubs also buy a lot of their beer from the hundreds of British-owned microbreweries represented by SIBA (Society of Independent Brewers). These are also smaller, independently-run businesses which rely upon wet-led pubs for their route to market.
Further strain and misery for small pubs already struggling
The reduction in VAT and the 50% discount “Eat Out To Help Out” scheme unveiled by Rishi Sunak in his statement has unbalanced the market at a critical time for smaller businesses, many of whom are under extreme pressure already.
The Chancellor’s action is a massive and unfair “nudge” to consumers, pushing them towards food-led operations which will make wet-led operations unviable and put them out of business. It is likely to hit microbreweries badly too, ultimately reducing drink choices for consumers in pubs and bars.
The help and support being offered to the hospitality industry needs to be spread evenly and fairly across the sector. However, in this instance, the Chancellor’s statement favoured larger businesses over smaller ones, who in many cases are the most vulnerable following the lock down.
This is a trigger event and amplifies the manifest unfairness already prevalent in the pub and beer sector. Regional breweries who still treat their pubs as a shop window for their products will probably try to ensure their estates remain intact.
But, if smaller, wet-led community pubs owned by the big regulated pub companies are closed they may never return. The pub company owners will be tempted to realise maximum revenue from the property by claiming the pubs aren’t viable to local planning authorities, applying for ‘change of use’ and selling off sites to property developers.
The Forum of British Pubs is currently writing to every local planning authority in the UK to make sure they are applying a proper and efficient viability test to all such applications.
We are also asking the Chancellor to look at more balanced support package for the hospitality industry. Working together with the Pubs Advisory Service, we’re taking direct and immediate action, calling upon the Competition and Markets Authority to launch an inquiry to tackle unfairness in the wholesale beer market as a matter of urgency in order to restore fair and lawful competition to the hospitality sector.
The last inquiry was in 1989 and the sector is long overdue another one.
We need your help. You can make a difference today.
1. Sign the petition to help us highlight unfairness in the trade.
2. Join the Forum of British Pubs.
3. Use the form below to sign up to support our #protectyourpub campaign. It’s completely free to become a supporter and anyone can bring their voice to our campaign. Simply fill in your details and click on the “Support Our Pubs” button.