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.
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.