Last chance saloon

Inns and pubs across the UK are closing at an unprecedented rate, with an estimated two dozen pub closures now happening every week. Bill Lumley speaks to campaign groups dedicated to force the government to recognise the injustices of the business rate system for licensees
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In 2017 the UK government dramatically increased rateable values for many pubs, and did so unfairly according to the campaign group Save Our Pubs. The rateable values for pubs are derived from factors including turnover, or ‘fair maintainable trade’.

Last year the lobby group, which started out as Save St Albans Pubs, comprising a number of the town’s pub landlords, spearheaded a campaign to address the unreasonable impact of business rates on pubs and successfully called for case studies earlier this year to present to the government to bolster its case for a change in rates assessment.

Members of the campaign group met the then Exchequer Secretary to the Treasury, Robert Jenrick MP, in February this year to urge the Government to review pubs’ business rates and have since produced evidence of pubs that have seen an unfair increase in business rates since the last Budget.

The business rate relief announced in last October’s budget provided one third off business rates for businesses with a rateable value of £51,000 or less, but this reduction was not enough to help the majority of pubs in St Albans, which saw a sharp increase in their business rates.

The group told the Treasury Minister the cut in rates was putting further pressure on their businesses rather than proving to be of any help.

Results emerging

The biggest achievement of the campaign group so far is that it is now consulting with government on the 2021 business rating system. Spokesperson Mandy McNeil tells Innkeeper:

“The whole issue with taxes is that they are too high. We have highlighted to the government that they failed to implement the policy in accordance with their own guidelines.”

There are supposed to be rate tests with regard to pubs on the basis of fair maintainable trade by a reasonably efficient operator, she says.

“If you are in St Albans for example and you have a Michelin-starred chef in your inn’s restaurant then the incremental revenue you get over and above that should be discounted, because the next person that comes into the inn might not be able to sustain it.”

Some 50% of pubs saw their rates fall, but 30% saw them rise by 50%, and around 10% saw rates rise of more than 100%, she says.

There are 49,000 pubs in the UK.

“We looked at the rateable values of all of them and calculated that around 8,000 pubs had business rates rise by more than 100%.”

She adds:

“This is the biggest factor affecting the decline in the number of pubs.”

Nationwide support

Save our Pubs won the backing of nationwide consumer organisation CAMRA a year ago, providing it with access to the national reach of the consumer lobby group. The real ale lobby group campaigns on behalf of those who enjoy drinking beer cider and perry and going to pubs to do this.

CAMRA chief executive Tom Stainer told Innkeeper:

“In order to give consumers best value for money and the best experience when they are enjoying the drinks we have evolved to campaign for issues like business rates and beer duties. For this reason, we have become more focused on campaigning for pubs as well as consumers: we recognise that if you like real ale, you like to drink it in a good pub.”

He says that while the Save Our Pubs campaign is not organised by CAMRA, his organisation is very supportive of the campaign, which he says has been highly successful in its own right.

“They are addressing an issue that is very important to us both as an organisation and to licensees across the country,” he says.

The issue of business rates is of vital importance to innkeepers and licensees because, he says, because while they only account for about 0.5% of business turnover, they are paying close to 3% of total UK business rates

“Estimates are that licensees are now overpaying in total around £500m a year. This issue is vital to the viability of pubs and inns, but obviously it is of equal importance to beer consumers. Pubs are closing across the country, and sadly we are still seeing dozens of pubs closing every week and consumers are losing out as they don’t get that great choice of pubs and that great value for money.”

As an organisation CAMRA is heavily lobbying government too for reform of the business rate system, he says.

“We feel it is penalising licensees, preventing investment, management and employment particularly of young people in local areas and is therefore stopping money going into the local economy. A lot of our lobbying is focused that way,” he stresses.

“We support the Save Our Pubs campaign, and we have been helping out with the campaign in whatever way we can and providing advice to them,” he adds.

Tom also commends the lobby group not simply for having successfully lobbied parliament but also for having organised activities such as tours of pubs by MPs to hammer home the unfairness of the current business rate system to the lawmakers.

He says: “These tours really open their eyes to the real situation, taking these MPs around pubs and demonstrating how successful they are, and how they are being absolutely nailed by an increase in business rates. In some instances, it is necessitating licensees having to sell an extra 20,000 pints of beer per year just to break even under the new business rates.”

Much of the work the two lobby groups are doing in demonstrating to decision makers and politicians that what they are actually doing is driving very special pubs to the wall.

“Many of these are pubs and inns that simply cannot cope under the current business rate system,” he says.

National coverage

In addition to the St Albans campaign, CAMRA has a national lobbying campaign to copy the blueprint for success established in St Albans.

“The campaign now has a national feel to it with national press coverage, and the licensees behind it have been very successful. We are helping to spread that message because it is a life support for pubs across the country.”

He stresses that it would be very helpful to the cause if pubs and inns in other regions of the UK would take a look at what Save St Albans Pubs had achieved and consider whether they too can replicate the achievements by the same means on a local basis elsewhere.

“Anything innkeepers for example can do to add pressure to politicians by raising the issue, for example by writing to their local MPs, contacting the local press down to organising a fully fledge campaign like the Save St Albans Pubs, will help and add to the pressure,” he says.

They can mobilise their own customers too, he says.

“One of the great successes licensees Sean and Christo at Save St Albans Pubs have achieved is actually making their own customers aware of the impact the skewed business rate issue has on them. They are making their customers aware that if pubs are facing huge business bill hikes, the only way they can survive is by increasing the cost of beer. That obviously impacts on the customers. So, you can also mobilise your bar’s customers through various means, whether social media or traditional media.”

For example, the UK’s oldest pub Ye Olde Fighting Cocks in St Albans run by Christo Tofalli has produced a newspaper for his customers that details the issues of the campaign and helps inform his customers about the huge difficulties that he and other licensees face.

CAMRA membership

Caveating the following with “I would say this, wouldn’t I?” Tom says: “Encouraging customers to join CAMRA helps the ultimate goal, because the more members we have, the more we can represent the voice of drinkers and pub-goers, because we campaign on their behalf at a national level. Raising awareness of this and other issues such as the duty paid on every pint of beer served where one third of that goes to the Treasury. If we could reduce beer tax and allow retailers to keep more of the cost of the pint that wold in turn encourage more investment and more money into the local economy and make the whole trade more viable,” he says.

Although the statistics are not available he says there are probably many thousands of members of CAMRA who also run pubs.

“We don’t claim to represent the trade in that way, but we are obviously campaigning on issues that affect the trade from a consumer point of view,” he says.

CAMRA has done a vast amount of campaigning on beer tax on business rates and issues such as the pubs code and planning law.

“If anyone in the trade cares about beer, real ale, cider, perry as well as the viability of pubs, there are industry bodies that represent them. But I think CAMRA does a very good job of representing consumers,” says Tom. “We are listened to by government because we have a large membership, and we have a long history of campaigning.

“If licensees want to add their voice to what we are doing we welcome them as members,” he says.

Much of the campaigning undertaken by CAMRA is conducted via social media, but the group also runs many campaigns such as its Summer of Pub campaign.

The campaign kicked off during the May bank holiday weekend this year with the simple aim of encouraging pub-going throughout the summer. The consumer organisation wrote to thousands of pubs across the country encouraging them to host celebratory events to help more people rediscover their love for the great British local.

“Licensees signed up and we sent them graphics or beer mats and we listed their events on our website and got our members to like them. Licensees should keep an eye on our website and social media CAMRA official or camra.co.uk.

“In due course I am sure through campaigns such as Sumer of Pub we will introduce posters and beer mats to raise the issue,” says Tom.

Business rates

“I think we have a really strong argument,” he says. “It is an argument based in facts. You can point for example to the fact that pubs account for a tiny proportion of business turnover. They are paying a much higher proportion of their revenue on total business taxes.

“While there are numerous examples of pubs that are hugely successful and continuing massively to their local economies, they are being hit by business rates that either potentially close them down or in some cases have done so.

“When we talk to MPs and show them the way the pubs are being affected, we think they get the argument. We are therefore confident that MPs are listening and that they understand the problems.”

He says: “At the same time, we do understand that the business rate system is very complex, but I think for all sorts of reasons it needs reform, and not just in regard to pub. It needs to be fairer to everyone involved, not least to encourage investment and employment. At the end of the day more is going to be brought into the economy if they get it right rather than will be achieved by putting successful businesses out of business.”

More than 30 of the 50 pubs in the St Albans areal alone have been impacted, and they will need to collectively sell approximately 180,000 pints per year to cover the hike, according to Mandy at Save Our Pubs.

“A discount revealed in the October Budget gave a third off business rates for retail premises, but many St Albans pubs do not qualify because they are valued above £51,000.
“Additionally, turnover is part of the equation used to calculate business rates – a sore point for successful establishments,” she adds.

Trade association

The British Beer & Pub Association (BBPA) estimates more than 20 pubs are closing each week. Chief executive Brigid Simmonds tells Innkeeper:

“At the 2018 Autumn Budget, then Chancellor Phillip Hammond cut business rates for high street and other small business by a third for two years. This news was very welcome to the pub sector and we estimate it will have saved pubs a tax bill of £120 million, securing the viability of many community pubs. This did not help larger pubs, however, who have higher rateable values, but are not necessarily more profitable businesses.

“Without doubt, the current business rates system is obsolete and needs vital reform. As a whole, pubs are still paying 2.8% of the entire business rates bill, despite accounting for just 0.5% of business turnover,” she says.

Thanks to the hard efforts of the Save St Albans Pubs, the Save Our Pubs campaign, CAMRA and other industry associations and lobby groups the UK government is finally starting to listen. It can only help if other regional groups are formed to hammer home the message to the Treasury.

 

This post first featured in the Winter issue of Luxury Bed & Breakfast +InnKeeper magazine, which can be viewed here. Please subscribe so you can get the print magazine sent to you.

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