Pub closures rise to record 52 a week
22.07.2009
Pub closures up to 52 a week – more than seven a day
24,000 jobs lost in the last year
2,377 pubs close in last 12 months
Government loses over £254 million in tax in last 12 months due to pubs closing
A record 52 pubs a week are now closing in Britain, leading to the loss of 24,000 jobs in the last year, according to new figures compiled by CGA Strategy, released to today by the British Beer & Pub Association (BBPA).
The figures for the first six months of 2009 show the rate of pub closure has increased by a third, up from 39 pubs a week in the last six months of 2008. Over the last 12 months, 2,377 pubs have closed, costing 24,000 jobs. In the last 3 years a total of 5,134 pubs have closed. There are now 53,466 pubs in Britain, down from 58,600 in the year before the Licensing Act came into force.
Despite these closures and big pressures, such as additional regulation costs, the industry is also facing a double whammy on beer tax over the next few months - with the planned VAT increase in January and a further 2 per cent above inflation rise in duty in March under the Government's beer tax escalator.
“The recession is proving extremely tough for Britain’s pubs,” said BBPA chief executive David Long. “However, those economic pressures have been made much worse by a Government that has continued to pile on tax and regulatory burdens. The last two Budgets have seen a 20 per cent increase in beer tax, which alone has added more than £600 million to our tax bill. In addition, Government continue to press ahead with the Mandatory Code of Practice, which they say heap at least £30 million of extra red tape cost on pubs in the first year alone.
“While every other sector seems to receive a sympathetic ear and a tax payer funded handout from Government to tide them through the downturn, all we are getting is a deaf ear and a higher tax bill.”
The BBPA figures show pub closure is reducing Government tax revenues. The industry’s total tax bill now stands at £6.1 billion a year. Every pub contributes £107,000 in tax a year – 30 per cent of turnover. Pub closures over the last year have therefore cost the Government more than £254 million in lost taxes – a loss that is increasing by more than £5.5 million a week. Sector job losses are also costing the Government an additional £1.53 million a week in job seekers allowance.
“Closing pubs are not only a loss to communities, but a loss to the Treasury,” said Dr Long. “Government should look at valuing and rewarding pubs as community assets. Not only would this have social policy benefits by supporting a hub of community cohesion, but financial policy benefits in terms of tax revenues, particularly at a time when the public purse is stretched.”
The BBPA also highlights the scale of job losses in the sector, which it says is often overlooked and compares it with the furore generated by the job losses at the Mini car plant earlier this year.
“Every week, a further 461 jobs are lost in our sector. That’s more than two Mini car plants a month.” said Dr Long. “Government now needs to listen to the pub sector in the same way it listens to other sectors suffering this level of job losses. Not special treatment, just equitable treatment. As a first step, Government should commit to not increasing the cost and complexity of running a pub, by stepping back from any more tax or red-tape increases.”
Community pubs are proving the most vulnerable in the current economic downturn. Branded pubs and café style bars are actually opening at a rate of 2 a week. However community pubs are closing at the rate of 40 a week and nine traditional town circuit bars are shutting a week – five pubs a week are closing in other categories. Food seems key to some sustainability. Pubs that focus mostly on selling drink are shutting up shop at the rate of 51 a week, while those that focus more on food are closing at one a week.
Notes to Editor
1. The pub closure figures are compiled by CGA Strategy for the British Beer & Pub Association.
2. Figures are net and include new pubs that are opened.
3. Beer tax was increased in the Budget of 2008, the PBR of November 2008 and the Budget of 2009 by a total of 20%
4. The Mandatory Code of Practice is in the Police and Crime Bill which is currently proceeding through Parliament.
5. The Home Office is currently running a series of regional consultation meetings on the Mandatory Code.
6. The tax contribution of pubs is calculated on the basis of the Annual Business Inquiry, published by National Statistics. The calculations are set out in the table below.
Table: Tax Contribution of pubs
Summary based on 2007 Annual Business Inquiry (ONS), Nielsen and BBPA estimates
[table=35]
7. The British Beer and Pub Association is the UK’s leading organisation representing the brewing and pub sector. Its members account for 98% of the beer brewed in the UK and own nearly two thirds of Britain’s 54,000 pubs.
For further information contact:
Mark Hastings
Director of Communications
mhastings@beerandpub.com
Tel: 020 7627 9151 / 07784 181794