The Frenchman fighting to save 'le pub'
Added: Sunday, February 26th 2012
Jacques Borel has a mission in life – to breathe life back into pubs and restaurants by slashing the rate of VAT levied on food and drink. The 85 year-old Frenchman is a bundle of energy. He works a 70-hour week, travels throughout Europe and now concentrates his efforts on Britain.
I met him in the luxurious surroundings of the Sofitel hotel off London’s Pall Mall. He’d arrived by Eurostar and was staying in one of the hotels in the chain he’d bought and ran for many years.
His success is remarkable. In Belgium, the Czech Republic, France and Germany, VAT on restaurant food has been cut to around 5%. Before the French parliament slashed VAT, Borel had four meetings with Nicolas Sarkozy. It helps if you greet the president sporting the discreet badge of the Légion d’Honneur, France’s highest award, in your buttonhole.
He claims that his campaign has created 650,000 new jobs. His ambition is simple if daunting: to have launched one and a half million new jobs in bars and restaurants throughout Britain and Europe before he finally calls it a day and retires. Most people would be deterred by the enormity of the task.
But Jacques Borel is a man of iron determination. In the 1950s, he ran the Vietnam office of IBM during the French colonial period when the Vietnamese were fighting for independence. Earlier, at the age of 13, he’d worked as a courier for the French Resistance during World War Two. He cycled between the German-occupied section and the Vichy south, leaving messages in churches for the freedom fighters in the Resistance. He met his wife during the Liberation of Paris in 1944 when he was 17.
With such a background, getting governments to cut the rate of VAT on food and drink seems an easy task. But he stresses the enormity of the job and the layers of bureaucracy he has to tackle.
“Before you meet a minister, you must convince junior ministers and their aides that you have a convincing argument,” he says. “If they agree to set up a meeting, they prepare a two-page briefing for the minister, with the key points highlighted, so he will have a summary of the case before he meets you.”
In Britain he is backed by 32 supporters from the food and drink industries, including the Independent Family Brewers of Britain (IFBB), the British Beer and Pub Association (BBPA), and the Association of Licensed Multiple Retailers (ALMR). He is confident the number of supporting bodies will have grown to 60 by the spring. The aim is to create 140,000 new jobs in Britain as a result of cutting VAT from 20% to 5%.
“In Britain you have a 42% rate of tax on beer,” he says. “Ireland and the UK are the only EU countries where supermarket food is zero rated for VAT. As a result, the supermarkets can subsidise alcohol by selling it at a loss while people who eat in pubs have to pay 20% VAT.”
“Cheap supermarket booze,” he adds, with a good grasp of English slang, “is the cause of binge drinking. The medical profession says that 95% of people they treat for liver disease bought their alcohol from supermarkets. The best way to tackle binge drinking is to get people back into pubs.”
He says the brewing industry accounts for 1,300,000 jobs if you include pub and brewery workers, farmers that grow the raw materials needed to make beer, and transport companies that deliver the raw materials and the finished beer. Cutting VAT would not only create new jobs in pubs but there would be a knock-on effect in the supply chain, Borel adds. For every 100 new jobs in the pub trade, a further 70 would be added in brewing, farming and transport.
He’s not grabbing statistics out of thin air. He points to his success in mainland Europe, where the Belgian, Czech, French and German governments have responded to his campaign by slashing VAT from 19% to 5 or 7%. In Finland, where VAT is an astonishing 23%, the rate has been cut to 13% for the restaurant industry. In France alone, he says, 21,700 jobs have been created since tax was reduced. Now the European Commission has adopted a unanimous decision by the 27 Ministers of Finance to allow each member state to apply a reduced rate of VAT to the restaurant industry instead of the standard rate.
He doesn’t restrict his campaign to Europe. He has taken the fight to 60 countries throughout the world and he has won a reduction in VAT or sales tax in 58 of them.
He accepts that Britain has a different model to the rest of Europe, with pubs and bars playing a bigger role in the leisure industry than restaurants. Pubs and clubs account for 31% of annual turnover, compared to 16% for licensed restaurants.
“Britain has a different culture,” he agrees. “But nothing’s impossible. An enterprise that’s called impossible means that something hasn’t been tried. And politicians need to be re-elected! I had four meetings with President Sarkozy and I convinced him because he wants to be re-elected this year. Your coalition government wants to be re-elected in 2015.
“The major worry for both Sarkozy and the British government is unemployment. It’s 8.1% here and 10.1% in France. It’s bad – especially among the youth. You can’t have one million young people out of work – you will have more riots on the streets. You have to create jobs and my campaign is aimed at creating jobs in pubs and restaurants. If you decrease tax you get more activity. Pubs have to hire people to serve, cook and wash dishes.”
From his experience of running hotels and restaurants, he says people can be trained in 21 days – “and then they are active, serving and cooking.” He’s a great anglophile, dating from Britain’s support for the Free French in World War Two. He visits London for monthly meetings with his VAT Club and also travels throughout the country, meeting brewers and pub companies.
As a result, he understands Britain’s unique leisure culture, the importance of the pub and the high cost of restaurant food here compared to other European countries. “95% of Brits can’t afford more than £30 for a meal,” he says. “Pubs are 80% wet trade and 20% dry, which is why a cut in VAT on beer is as important as food.” The Belgian government is now considering slashing VAT on wine and beer as well as food as a result of his lobbying.
He stresses the impact of a tax cut on trade by pointing to the effect on one French restaurant group. Flo runs steak houses and brasseries and is listed on the Paris Stock Exchange. The reduction in VAT in France enabled the chain to cut prices by 5.2%. As a result, the number of customers rose by 8.5% in just three weeks and the company’s share price rose from two euros before the cut to 4.16 today.
“And that’s in a depressed market,” he points out. He fully expects a similar increase in trade for British pubs. The money created by a tax cut and increased trade would be used, Borel says, to not only cut prices but also raise wages, improve training, refurbish pubs and increase profits.
He has a small staff of four people but together they have prepared an impressive portfolio of charts and graphs to support the case for a tax reduction. He hopes to start talks with British government ministers in April. They will face a man with a long and impressive record of turning round the fortunes of IBM in Vietnam in the 1950s to running successful restaurants and hotels.
He is a man of the people who also pioneered the use of luncheon vouchers in France and many other countries. And he has a great Gallic love of food and drink.
“I am not anti-alcohol,” he says, raising a stern finger. “The Americans tried Prohibition and the result was Al Capone!” Confronted by Jacques Borel, even the Mafia boss would have paid his taxes.
1927 born in France
World War Two: courier for the French Resistance
1947-1950 Business School
1950-57 IBM France, including director of Vietnam operations
1957 Created Auberge Express, self-service restaurant. Start of luncheon voucher system in France
1959 Created Générale de Restauration (now Avenance)
1960 Assisted Ministry of Finance in establishing VAT to the hotel and catering industry in France; created Restaurants Jacques Borel, which later became ACCOR
1961 Created fast food chain Wimpy in France
1962 Created Ticket Restaurant chain based on use of luncheon vouchers
1967 Negotiated reduction of VAT from 15% to 6% for institutional food services and for 1, 2 and 3 star hotels; won agreement with General de Gaulle, President Pompidou and Michel Debré, Minister of Finance, for luncheon voters to be exonerated from social contributions and income tax
1969 Opened first motorway restaurant in France
1970 Created 12 motorway restaurants in Spain
1972 Floated Jacques Borel Restaurants (now ACCOR) on Paris Stock Exchange
1973 Created Ticket Restaurant chain in Portugal
1974 Created Ticket Restaurant chain in Germany
1975 Created Ticket Restaurant chain in Brazil
1975 Bought Sofitel hotels group
1977 Resigned from chairmanship of Jacques Borel International
1977-1982 Created La Vie en Rose and Casa di Pompei restaurants in California
1977-1989 6,000 visits to the United States Congress to negotiate legislation required for luncheon voucher system
1991-2000 Ran JB Consultants in France
Since 2000 Creation of Club TVA [VAT] JB. Negotiated reduction in VAT on restaurants, catering and hotels in Belgium, Czech Republic, Finland, France and Germany
British breweries and
pub companies belonging
to VAT Club Jacques Borel
W H Brakspear
Hall & Woodhouse
J W Lees
Wells & Young’s
Young & Co