British pub closure crisis escalates

The extent of the crisis facing the British pub industry has become clearer after figures revealed a record 52 pubs a week are now closing in the UK, leading to the loss of 24,000 jobs in the past year alone.

New figures compiled by CGA Strategy for the British Beer & Pub Association show the rate of pub closures in the first six months of 2009 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.

According to the figures, there are now just 53,466 pubs in Britain, down from 58,600 in the year before the Licensing Act came into force and around 70,000 in 1980.
 
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 coming into force in January 2010 and a further 2% above inflation rise in duty in March next year under the government’s beer tax escalator.

BBPA chief executive David Long said: “The recession is proving extremely tough for Britain’s pubs.

“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% 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.”

 
Ironically, the BBPA figures show pub closures are 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% 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, according to the BBPA.

Sector job losses are also costing the government an additional £1.53 million a week in job seekers allowance.
 
Long added: “Closing pubs are not only a loss to communities, but a loss to the Treasury.

“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 highlighted the scale of job losses in the sector, which it said is often overlooked. Long compared the figures to 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 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 recession, 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.

The figures indicate that the strength of a pub’s food offering seems key to sustainability.  

According to the BBPA, 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.

Alan Lodge, 22.07.2009