Calling for the duty to be slashed in the upcoming budget on March 3.

[Chippy_Tea]

A Cumbrian MP has joined with 67 colleagues in writing to the Chancellor calling for a cut to beer duty.

Barrow MP Simon Fell is among those who have signed the letter, written to Rishi Sunak, calling for the duty to be slashed in the upcoming budget on March 3.

The boss of a family-run pub group has also backed the call.

Kirsty Ridge, managing director of Lakeland Inns, says the hospitality industry has ‘taken a relentless battering’ during the pandemic.

It follows concerted calls from the beer and pub sector for increased support from the Chancellor in his Budget following the announcement of the Prime Minister’s roadmap out of lockdown, which confirmed that pubs will not be able to fully open inside and outside without trading restrictions until mid-June at the earliest.

The British Beer and Pub Association has said the very cautious reopening of pubs will cost the sector £1.5 billion in lost trade in April alone, as three in five pubs will not be able to open or be viable with outside service only.

It says that even when pubs can reopen indoors from mid-May at the earliest, they will still be significantly down on business due to remaining trading restrictions.

To date, more than 500,000 people have signed the Long Live The Local petition calling on The Government to cut Beer Duty.

More than 275,000 people have also written to their local MP asking them to urge the Chancellor to cut Beer Duty.

Simon Fell said: “Pubs are at the heart of communities across Barrow and Furness, but with them bearing a disproportionate burden as a result of the pandemic the Government should consider a cut to beer tax.

“I’m supporting the Long Live the Local campaign and calling on the Chancellor to cut beer tax at this year’s budget to support pubs in our local communities.”

https://cumbriacrack.com/2021/02/26...acks-calls-for-chancellor-to-slash-beer-duty/

 

[chthon]

That would be a change after 200 years of tax increase...

 

[Pavalijo]

I think that making the tie illegal would have a much bigger and better effect.....

 

[NPi]

I think that making the tie illegal would have a much bigger and better effect.....

They have, sort of, pubs can now opt out from tie at will.

https://www.clarkewillmott.com/lega...tigation/the-pubs-code-and-going-free-of-tie/
Sounds silly to say, but tied businesses have actually been better protected during COVID19 as their largest overheads directly relate to their turnover. That said I do think there is a lot of ignorance from landlords who enter restrictive contracts with little to no experience, thinking it will be an easy money maker.

That would be a change after 200 years of tax increase...

The government has previously reduced Vat from 20% to 5%, however with the tier system in place the benefits of this have not been felt consistently. Hopefully they will be reduced again with pubs allowed to trade to actual capacity, giving the benefit intended. It would be nice to see this reduction become permanent, putting us in line with other European countries, but I doubt it will.

 

[Pavalijo]

I will admit I knew nothing about the route to removing a tie so thanks for the link - but the article points out that it can cost £100,000 to get out of the tie, that it is not worth doing for pubs with less than £1m annual turnover, and that if you are successful your landlord might seek possession at renewal.
The base rent for a tied pub might be a little lower (so better in Covid times) but it is still there.
I bought a recently closed pub for a client from one of the pub companies because the business was not viable under the tie system. We relet it as a pub and it is still going strong 5 years later.
We bought it because it has residential development potential but I couldn’t understand why it had failed - it was in a great position. Spoke to a pal of mine who is a licensed property specialist and he told me that (from memory) the landlord would have been paying £1.50 for a pint of lager under the tie but could buy it for 75p without tie. It was in an area of relatively low value housing (a good council estate) so 75p made a big difference to whether local people would support the pub. He was absolutely right.

 

[NPi]

I will admit I knew nothing about the route to removing a tie so thanks for the link - but the article points out that it can cost £100,000 to get out of the tie, that it is not worth doing for pubs with less than £1m annual turnover, and that if you are successful your landlord might seek possession at renewal.
The base rent for a tied pub might be a little lower (so better in Covid times) but it is still there.
I bought a recently closed pub for a client from one of the pub companies because the business was not viable under the tie system. We relet it as a pub and it is still going strong 5 years later.
We bought it because it has residential development potential but I couldn’t understand why it had failed - it was in a great position. Spoke to a pal of mine who is a licensed property specialist and he told me that (from memory) the landlord would have been paying £1.50 for a pint of lager under the tie but could buy it for 75p without tie. It was in an area of relatively low value housing (a good council estate) so 75p made a big difference to whether local people would support the pub. He was absolutely right.

You're correct, for the brewery operations tied businesses are bread and butter, with them not having to compete to market their goods. This has been enormously important in retaining historic breweries. However historic breweries are rather inefficient and do not retain the same margins on an open market.

The smart ones have seen this and you will see them leveraging their historic brands to sell on the open market, however a number of suppliers get around this competition by ensuring exclusively deals (why you will rarely see coke and Pepsi together).

That said the costs charged have to take into account other overheads a typical drinks supplier wouldn't. A drinks supplier would not be responsible for maintenance in the event the landlord left the property in poor repair (most likely in my experience), as well as all other manner of head office (legal, insurance, POS, training) costs.

The large costs to try and leave a tie show how much of a vital income this is to breweries. That said, both free of tie and tie work for smart operators, and neither work for those out of their depth.

 

[thesteve]

The pub industry is dying and for that reason part of me wonders whether government money would be better directed into something which is going to be sustainable and also something which would better benefit the country. Times have changed and a lot of people today either drink at home, don't drink at all or drink in restaurants which is why so many pubs have closed in the last few years. Pubs have had self employment grants, their rates slashed, VAT on food reduced to 5%, staff wages reimbursed through the furlough scheme and most are getting four weekly grants because they are closed. How much money can we realistically keep throwing at these businesses when it is only a matter of time before most of them close their doors?

 

[Chippy_Tea]

I think most wet pubs have had their day sure some will survive but survival will be all it is, i think after such along time being stuck inside people will be planning a family gathering (we are) at our favourite pub that does amazing meals and we are looking forward to it, how many of us have realised how much we took other family members for granted before Covid hit i for one realised how infrequently i used to visit my ageing parents its all to easy to call them and have a chin wag but that's not the same as going to see them in person i think this will change when the risk of visiting has all but gone.

 

[NPi]

The pub industry is dying and for that reason part of me wonders whether government money would be better directed into something which is going to be sustainable and also something which would better benefit the country. Times have changed and a lot of people today either drink at home, don't drink at all or drink in restaurants which is why so many pubs have closed in the last few years. Pubs have had self employment grants, their rates slashed, VAT on food reduced to 5%, staff wages reimbursed through the furlough scheme and most are getting four weekly grants because they are closed. How much money can we realistically keep throwing at these businesses when it is only a matter of time before most of them close their doors?

I can't really objectively comment "as I have skin in the game" so to speak, but what's the difference between a pub and a restaurant and why should one be more valuable than the other.

Hospitality as a whole is a massive employer, adding billions to the annual economy.

 

[Clint]

Good pubs will stay...I do think though there may be a bit of a revival in pub going when all this is over as people need to get out..

 

[thesteve]

I can't really objectively comment "as I have skin in the game" so to speak, but what's the difference between a pub and a restaurant and why should one be more valuable than the other.

Hospitality as a whole is a massive employer, adding billions to the annual economy.

Yes, I agree about hospitality as a whole and I don't think one is more valuable than the other just that the whole thing is evolving and as Chippy says above, the wet pubs are disappearing. It seems illogical for example just to push up something like corporation tax to bring in government revenue but to then hand it over to keep failing businesses afloat instead of reinvesting it in a more sustainable way.

In many ways covid has speeded up the decline of businesses that were struggling before the pandemic and in my view pubs are one of those. Not suggesting that is a good thing by the way, just that the world is changing.

 

[NPi]

Yes, I agree about hospitality as a whole and I don't think one is more valuable than the other just that the whole thing is evolving and as Chippy says above, the wet pubs are disappearing. It seems illogical for example just to push up something like corporation tax to bring in government revenue but to then hand it over to keep failing businesses afloat instead of reinvesting it in a more sustainable way.

In many ways covid has speeded up the decline of businesses that were struggling before the pandemic and in my view pubs are one of those. Not suggesting that is a good thing by the way, just that the world is changing.

Totally agree that poor performing and unsustainable longterm businesses should not be sustained on a longterm basis, however I don't believe the level of support offered currently is long term support. I think there will be a number of businesses that will fail, but we all suffer if this happens at one time. If its gradual, the wheel keeps on spinning, confidence remains high, that money the government has provided never leaves the economy (its not saved as a result of poor confidence) and we all live on

I would agree consumer habits and preferences are changing and local wet lead pubs are suffering as a result, but that evolution has been gradual since the 90's.

Some would say UK manufacturing, the high Street, offices and many others are all unsustainable and should be left to fail, but then so would or economy.

 

[Pavalijo]

NPi did I misunderstand the sell off of large pub chains by their brewery owners - hived off to newly formed big pub companies run by venture capitalists?
I thought that big breweries couldn’t own large numbers of pubs these days under a competition commission ruling. Small breweries with a few pubs might slip under the rules.
The problem now is that the pub companies paid huge sums for the freehold pubs and their business model only worked by them screwing the landlords of the small local boozer, which might otherwise be successful. You now see a succession of dreamers putting in their hard earned savings to resurrect another failed business, only to see the pub company’s business model drain them dry.
If you buy an empty failed pub company pub for its “alternative use value” and then let it as a pub to show a reasonable commercial return on your investment but without imposing a tie on the tenant then it can work. The problem is that if the pub company has another operating pub in the catchment area then they will only sell the closed pub with a restrictive covenant to prevent it opening as a pub.
So we have less small pubs, all selling beer at a cost that prevents (some) people from popping in for a swift one on the spur of the moment.
And we have pubs selling sh#te beer!

 

[NPi]

NPi did I misunderstand the sell off of large pub chains by their brewery owners - hived off to newly formed big pub companies run by venture capitalists?
I thought that big breweries couldn’t own large numbers of pubs these days under a competition commission ruling. Small breweries with a few pubs might slip under the rules.
The problem now is that the pub companies paid huge sums for the freehold pubs and their business model only worked by them screwing the landlords of the small local boozer, which might otherwise be successful. You now see a succession of dreamers putting in their hard earned savings to resurrect another failed business, only to see the pub company’s business model drain them dry.
If you buy an empty failed pub company pub for its “alternative use value” and then let it as a pub to show a reasonable commercial return on your investment but without imposing a tie on the tenant then it can work. The problem is that if the pub company has another operating pub in the catchment area then they will only sell the closed pub with a restrictive covenant to prevent it opening as a pub.
So we have less small pubs, all selling beer at a cost that prevents (some) people from popping in for a swift one on the spur of the moment.
And we have pubs selling sh#te beer!

Very much agree ties are no good for most.

Yes there was the introduction of the beer orders, which in the interest of competition, or should I say not in the interest of monopolies pub groups are limited to 2000 sites. In my opinion the tie does not work well for all parties, in most cases, in some (very very very few) it's great.

In my opinion the only way a pub will work on a large scale (pubco size) is through a managed business plan, and the only way an operator can undercut and form a profitable niche is on the free of tie model.

Pubs that can cater to the consumer (be they of any background and any taste) will prosper. The agility of a small independent that can stock the beer the locals buy will always outperform a big chain that is the same across the country. Thankfully pubcos don't compete much with local independents.

Few win at price, more win at value. Know your niche and stick to it.

 

[Clint]

I do hate those pubs that sell John Smith's,Carling,John Smith's,Something called Smooth flow,Carling. Hogwash.

 

[Covrich]

I do hate those pubs that sell John Smith's,Carling,John Smith's,Something called Smooth flow,Carling. Hogwash.

I rarely go out to a pub for a drink but nothing more deperessing going to the bar to see "whats on tap" and seeing that selection