Pubs are a vital part of the fabric of every local community and every local authority in Britain. As with local shops, post offices and schools, communities simply aren’t the same if they lose their pubs. They are also vital to local economies, supporting nearly 900,000 jobs, UK wide, and an essential part of the tourism, leisure and hospitality sector, right across the country.
Yet many pubs have struggled in recent years, with a net reduction in pub numbers of 8,000 over the past decade. Whilst changing lifestyles and leisure opportunities are partly responsible, national and local taxation and regulation has played a major role.
At national level, pubs have struggled under the burden of huge rises in beer duty and the unfair distribution of business rates. On beer duty, despite three, one penny cuts from 2013-15, we have seen a 39 per cent rise over the past ten years. Whilst pubs are diversifying, and increasing their sales of food, they still rely greatly on beer, which accounts for nearly two-thirds of all alcoholic drinks sales.
Pubs also shoulder an unfair burden from business rates. They pay 2.8 per cent of the entire rates bill, despite accounting for just 0.5 per cent of business turnover. Wholesale reform is needed to reflect changes in the economy to ensure that others, in particular online business, pay a fairer share. We also need to see an extension of the new, pub-specific business rates relief, and its increase from £1,000 to £5,000, per year.
Of course, pubs are also greatly affected by local, as well as national policies, as the issue of business rates itself demonstrates. It is vital that reliefs reach all pubs that greatly need this help. Whilst many local authorities have done a good job in ensuring pubs receive their reliefs, others have lagged behind. It is also important that local authorities working on strategies for the local retention of business rates by 2020, think carefully how they can support their pubs.
The local planning system too, has a major impact. The Assets of Community Value (ACV) legislation introduced in 2012 offered some protection for pubs and gave local residents the ability to buy a threatened local asset and run it themselves.
Given the vital role of many pubs, this is something we support in principle. However, it is important that the legislation is not used in a way that overly burdens pubs. As it turns out, around half of all ACVs designated under the legislation are pubs. However, ACVs have been granted on premises where the pub owner had no intention of selling. The ACV listing, in creating potential barriers to a sale, can have a negative effect on the value of the property, which can often be its owner’s only major asset, as there are around 26,000 independently owned pubs in the country.
In 2015, the legislation was further strengthened through a requirement for pubs which were ACVs to apply for planning permission for a change-of-use. Some local authorities have also made use of what are called Article 4 Directions, requiring pubs to apply for planning permission even for minor alterations. This is very unhelpful, creating additional, costly burdens for operators. All of these actions have been over-ridden by the changes to the Use Class Orders, through the Neighbourhood Planning Act 2017 which require all pubs to apply for planning permission to change their use (except to extend food-led activities). We are therefore asking local authorities to think carefully before imposing an ACV listing and asking DCLG to strengthen the guidance, which is certainly in need of updating.
Other authorities have sought to use the Government’s Late Night Levy legislation as a source of additional revenue adding to the tax burden for pubs. Despite the fact that pubs are now often operating more in the causal-dining market than as traditional drinking establishments, this acts as an additional tax on valuable local businesses. The introduction of several Late Night Levies has been disappointing, though thankfully, other authorities have reversed plans to pursue this course. One location has even abolished its levy, as it failed to raise the revenues intended.
Despite these challenges, I see huge amounts of positive work between local authorities and pubs around the country. There is widespread recognition that pubs are a vital part of our high streets, and that supportive policies, through strong partnership working, is the best way forward.
We are seeing this through the introduction, in many local authorities, of Business Improvement Districts, and a host of other initiatives, such as local Pubwatch schemes, Best Bar None, and Purple Flag, where there is great coordination and positive work between the police, local authorities, and local businesses. With a supportive policy framework, I am sure we can continue to see thriving pubs in every community, given the important contribution they make to local life and the economy.
Brigid Simmonds OBE
Chief Executive, British Beer and Pub Association and cCLOA Member