By Danielle Boxall, media campaign manager
Happy Beer Day! The sun may be shining, but after yesterday’s announced delay to ‘Freedom Day’, a dark cloud is hovering over the hospitality industry. There’s been vast coverage of how pubs have been affected by the pandemic (including our recent guest blog from The Stagg Inn in Herefordshire), but little attention paid to those that supply pubs. After all, what’s the point of a pub without any beer?
We visited the Hogs Back Brewery in Surrey to learn how they’ve lived through the pandemic and what measures are needed to keep the industry alive in the coming years. Managing director Rupert Thompson kindly showed us around the brewery and the hops fields before we sat down to chat about the challenges hospitality has faced.
From our discussion, it’s clear that without the support offered during the government’s national lockdowns, the industry would really be on its knees. But it was also undeniable that there’s a long way to go before pubs and brewers are fully back up and running again. Rupert says that businesses need to start making a profit again, and that the sector needs a couple of years before their balance sheets are fully recovered.
To help get hospitality back on its feet, Rupert told me there were three policies the government should introduce:
- Cut beer duty
- Continue the VAT reduction
- Reform business rates
Alcohol duty has been a longstanding bugbear of the TPA, and we previously ran a successful Cut Beer Tax campaign. As Rupert explained, we have the second-highest beer tax in Europe (after Ireland), and are currently paying 10 times the rate in Germany. In this year’s budget, the chancellor continued the beer duty freeze, but if the government is really serious about helping pubs prosper, this is one area they should be looking at serious long term reform. Our research revealed there was huge investment in the industry after George Osborne scrapped the duty ‘escalator’ in 2013.
Rupert agreed that the VAT cut has encouraged more people to go to the pubs, particularly those offering cheaper prices on food. But for brewers like Hogs Back, the current scheme offers nothing to ease the tax burden as it doesn’t include alcohol. The sector needs time to repair its finances as Rupert mentioned, so extending the cut and including alcohol would be a boon for brewers and publicans alike. That’s the subject of our Quid’s Inn campaign.
The third measure is another particular bugbear of ours: business rates. As Rupert told me, pubs are loaded with a massively distorted rates burden. For the past decade, the amount paid in rates has been accelerating due to the rapid rise in the business rate multiplier - and its squeezing bricks and mortar businesses like pubs. The business rates system is becoming increasingly complicated - it’s about time HM Treasury gave it a complete overhaul, such as by allowing businesses to appeal their rates in times of economic hardship (like this one!). Firms are crying out for change. Lower, simpler taxes would be easier to understand and easier to implement, for government and business owners alike.
The government’s help so far has kept businesses from going down the drain, but there’s evidently plenty of work to be done to fix the way we tax the hospitality industry. This should start by extending the current reduced rate of VAT, and including alcohol in the cut to support a wider range of firms. I urge you to sign our Quid’s Inn petition to prolong the VAT cut - the pubs, punters, brewers and boozers need our help.