The British Beer & Pub Association (BBPA), the leading trade association representing brewers and pubs, has today urged Chancellor Rishi Sunak to cut VAT, business rates and beer duty for brewers and pub businesses as they begin their long and slow road to recovery after lockdown.
The trade association said its sector could, with the right support, help drive the economic recovery of the UK after the COVID-19 lockdown.
Despite pubs and brewing having been one of the hardest and longest hit sectors during the lockdown, and one of the highest taxed, it is trying hard to get back up and running as soon as possible – with BBPA members indicating that around 80% of their pubs will reopen in the coming weeks.
While the sector has reopened in England, it still faces a difficult road to recovery. Pub trading levels this first weekend out of lockdown were low and will remain low and operationally unsustainable until consumer confidence fully returns. Without further significant and immediate support, many businesses will not be able to survive until then.
For a full and sustainable recovery of the beer and pub sector, helping deliver growth for the UK economy and protecting jobs and local communities across the country, the BBPA has urged Chancellor Rishi Sunak to take three bold but critical steps in his stimulus package:
Cut to 5% the rate of VAT on food, drink and accommodation in the hospitality sector
The BBPA says a cut to 5% in the rate of VAT on food, drink and accommodation in hospitality would boost pubs and the brewers that supply them, and signal to consumers that the sector is open for business.
The BBPA believes that the near-term demand stimulus of cutting VAT to 5% would bring an immediate boost to the sector helping to secure hundreds of thousands of at-risk jobs. Particularly for the 43% of the 600,000 directly employed in pubs by the sector that are under 25 years old, ensuring their life chances are not permanently disadvantaged as a result of the COVID-19 lockdown.
As a highly regionalised industry - pubs are present in every region of the UK and breweries are often found in market towns and villages outside of major urban centres - a VAT cut to boost brewers and pubs would have a disproportionately high impact on under-invested regions. The BBPA estimate that cutting VAT to 5% would secure over 350,000 jobs in the sector.
Extended Business Rates relief
BBPA data shows that pubs pay five times their fair share of business rates. Per pound of turnover, pubs pay more in rates than any other sector.
If the current Business Rates relief holiday ends and rates revert to normal levels in April 2021, then this will likely push many pub businesses still struggling to pay lockdown debt and return to full trade over the edge, leading to permanent closure for many.
The BBPA says that extending the Business Rates relief for pubs is therefore crucial if they are going to play a fuller part in the economic recovery of the UK.
25% reduction in beer duty
The UK has one of the highest beer duty rates in Europe – its duty rate is eleven times higher than Germany or Spain’s and three times higher than the average rate in Europe. The BBPA says the Government has the opportunity to level the playing field, backing Britain’s national drink and home-grown brewing heritage.
Modest cuts and freezes in recent years have generated positive results for jobs, cost of living, capital investment and beer sales. It has been proven to work. But right now the BBPA says the Government needs to go much further. It says a 25% reduction in beer duty over the course of Parliament would signify a vote of confidence in a major domestic industry.
Emma McClarkin, BBPA's Chief Executive, said, “COVID-19 has hit our sector especially hard, but our brewers and pubs have a key role to play in getting the economy back on its feet and, crucially, boosting the nation’s morale.
“Our pubs and breweries want to play a leading role in the recovery. But we can only do that if we have the right help from the Government. Especially as pub trading levels have started very low and will remain unsustainable for a long time until consumer confidence fully returns. In addition, our pubs and brewers face a range of punitively high taxes with currently £1 in every £3 spent in a pub going straight to the taxman.
“The measures we have put forward are bold, but they are key to the future of communities across the UK and important British businesses. They are an investment for the future, not a cost.
“Cutting VAT, Beer Duty and Business Rates would secure some 350,000 jobs. As a sector, 43% of those employed in our pubs are under 25 years old. So these jobs we’d save would ensure the life chances of our youngest are not permanently disadvantaged as a result of COVID-19.
“Pubs are inclusive and public spaces – they help bring people together from all walks of life. They are the backbone of our high streets and at the heart of our domestic and international tourism sector. To lose our pubs would not just be an economic or jobs disaster, it would also be the end of many communities. We want to use our heritage to restore a sense of national unity and belonging by ensuring pubs remain at the heart of every town, city, rural and coastal community.”