Friday, 25 January 2013

Pots & kettles

I read today in the news that, according to the British Beer and Pub Association (BBPA), 381 million fewer pints were drunk in 2012. The BBPA blames the beer duty escalator, introduced in 2008, which increases tax on beer by 2% above inflation each year. Beer tax has thus increased by a massive 42% since March 2008.

I also read in the latest issue of What’s Brewing, which arrived today, that the business secretary Vince Cable has said he is going to clamp down on unfair practices by pubcos, responsible for the closure thousands of pubs. I think it’s extremely likely that he is doing this in the hope that it might ease the pressure on the government to end the escalator. More than 100,000 people signed a petition urging the chancellor to scrap it in the next budget in March.

So which is it - tax, or unreasonable business practices - that has caused the closure of thousands of pubs? While each side blames the other, and accepts no blame for its own activities, the answer is of course both.

When you think about it, there is a lot of dishonesty in what you might laughingly call a debate. I’ve heard politicians defend the escalator by saying they need the tax for hospitals and schools (it's always hospitals and schools, isn't it?). On the face of it, a difficult one to argue against. Except of course, the money doesn’t all go to hospitals and schools. It also goes on fighting an unending series of wars, a costly unsuccessful bid to get the football world cup, tax cuts for the rich, nuclear weapons, social security benefits to pay for high unemployment caused by economic incompetence, nuclear weapons, and so on.

I’ve previously heard the BBPA brazenly, but unconvincingly, deny that pubcos use the tie to charge pubs uncompetitive prices for rent, services and supplies way above the market rates. There's just so much evidence to the contrary for their denials to be credible. I have covered this in more detail previously here.

CAMRA criticises low supermarket prices and supports a minimum price for alcohol to try to level the playing field. It does so ostensibly to encourage responsible drinking, but in reality because it believes it would encourage more pub going. I regard this motive as dishonest and self-serving, and it also allies the campaign with some undesirable bedfellows who are hostile to booze in principle. It’s interesting that, compared to the same period a year earlier, in the last three months of 2012, sales of beer in pubs, bars and restaurants went down by 4.8% but in supermarkets it declined by 7.5%. Far from taking trade from pubs, supermarkets are being hit even harder.

I’m getting sick of all this dishonesty in the discussion about beer prices, I also tire of certain prosperous drinkers who argue on the blogosphere, and no doubt elsewhere, that beer should cost even more because it is a craft product requiring skilled expertise with quality ingredients. They are arguing against a position that doesn’t exist, because I have yet to hear anyone suggest that those involved in the production of quality beers shouldn’t earn a decent living and get a reasonable price for their products. They miss the point that the current price of beer is unreasonable, not because of selfish producers, but because of the double whammy of pubco greed and tax. The fact that those factors are beyond the producers' control doesn't make the end result any less unfair.

I’ve read a few brewers complain that they aren’t getting the price they deserve, and the usual implication is customer resistance. I do wonder whether they accept excessive taxation or unfair business practices as immovable occupational hazards, rather than part of their problem: too much of the price we pay for a pint goes to the Treasury or to pay for the expensive cars that pubco executives drive around in. If any do recognise this, I haven’t very often read them saying so.

With the news today that the UK economy shrank by 0.3% in the last three months of 2012, with no growth at all during the year as a whole and the real danger of an unprecedented triple dip recession, the government has the perfect excuse to leave the escalator in place. I feel the chances of it being lifted in the next budget are virtually nil, even though it has been argued that further tax increases are becoming self-defeating because they are depressing beer sales (and thereby reducing the tax collected) and increasing the rate of pub closures.

The main problem remains the abdication of responsibility by both pubcos and government of their respective roles in pub closures, and their pinning of the entire blame on the other party. Pots and kettles spring to mind.


  1. "So which is it - tax, or unreasonable business practices - that has caused the closure of thousands of pubs?"


  2. Oh, grow up. Are you seriously suggesting all these factors are irrelevant? (Go on, say yes, and make yourself look really stupid)

    The double dip recession (possibly triple soon), leaving people with less cash and either unemployed or worried they might be.
    Beer taxes rising by more than the rate of inflation.
    Pub companies overcharging their tenants for rent and supplies (including drinks).
    Falling beer sales overall (except for real ale ~ just).
    Cut-price drink in supermarkets.
    Sophisticated home entertainment systems.
    Changes in drinking habits, with young people increasingly going to their preferred bars and clubs, and less to what they call “old men’s” pubs.
    More choices of places to drink, such as bars, restaurants, hotels and clubs.
    Rising costs for brewers (e.g. raw materials) and pubs (e.g. utility bills).

    The smoking ban was a factor among many, not the only factor.

  3. One you didn't mention in your post, though.

  4. Obviously not; I was commenting on news I'd just read. The smoking ban took effect on 1 July 2007. I agree that the customers that pubs lost five and a half years ago certainly had an effect at the time but they are not a factor nowadays, as the disaffected smokers haven't put any cash into pubs for more than half a decade. The damage caused by their boycotts has happened and is in the past; we have to look elsewhere to explain current closures.

    I have covered the smoking ban several times on this blog, and will do again if it is relevant to what I am writing. On this occasion, it wasn't.


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