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Open letter to the Chancellor

Added: Tuesday, February 28th 2023

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Open letter to the Chancellor of the Exchequer, Rt Hon Jeremy Hunt, MP

 

Dear Chancellor,

Britain’s pubs and breweries are in crisis. In 2022, 554 pubs closed and it’s estimated that 21 are closing every week this year. Last year, 83 breweries pulled down the shutters, with a loss of hundreds of jobs and less choice for consumers.

It’s also a major loss to you at the Treasury. Brewing and pub retailing contribute £23.1 billion to the Exchequer every year – money that can help fund such vital public services as schools and hospitals.

The pub and brewing sectors need urgent help from you and I hope your Budget this month will reflect this.

Pubs play an important role in our communities. They do more than sell food and drink. They welcome people who can make friends, enjoy conversation or quietly read a book. A study by Loughborough University in 2021 showed that pubs play a key role in tackling loneliness and “offer social values above and beyond the contribution they make to the economy”.

The report echoed the findings of research carried out in 2016 by Professor Robin Dunbar at Oxford University for CAMRA, the Campaign for Real Ale. He said: “The pub offers an enriching experience where we have the opportunity to meet a greater diversity of people from all walks of life.”

People’s lives are not enriched when they visit a supermarket and yet the major grocers are sucking the life out of pubs by selling beer at massive discounts. My local branch of Morrison’s is currently selling boxes with 12 cans of lager for £11 – cheaper than the price of bottled water.

The reason why the high street retailers can sell beer so cheaply is because, as you know, they claim back VAT on the sale of alcohol. Tim Martin, the founder and chairman of the Wetherspoon pub group, says: “We estimate that supermarkets have taken about half of the pub industry’s beer volumes since Wetherspoon started trading in 1979. Unless the pub industry campaigns for equality it will inevitably shrink relative to supermarkets, which will not help high streets, tourism, the economy overall or the ancient institution of the pub.”

There are a number of steps I would urge you to consider to help pubs. First, take up the call from CAMRA and SIBA, the Society of Independent Breweries, for a 20 per cent cut in excise duty on draught beer. This would allow publicans to serve beer at lower prices and attract customers away from supermarkets. Increased volumes of beer sold in pubs would also be a vital shot in the arm for independent breweries.

The way in which supermarkets and global brewers twist the knife in the pub’s back was shown in February when the Carlsberg Marston’s Brewing Group announced it was increasing prices for its beer by 11 per cent for draught but just 5 per cent for packaged products.

A third of the cost of a pint in a British pub is accounted for by duty and other taxes. In Germany, another great brewing nation, the tax on beer is just a few pennies. We need to follow that example.

Pubs need a business rates holiday. I would ask you to look at cutting business rates by half for a year or even scrapping this out-dated scheme for good. At the moment, pubs struggle to meet the appalling burden of business rates.

In St Albans, where I live, the Olde Fighting Cocks, one of the oldest pubs in the country and a major tourist attraction, had its rates increased at the last review by 50 per cent to £33,000 a year. Another historic pub, the Boot that dates from the 15th century, had its rates increased by 87 per cent to £31,000. A branch of Sainsbury’s on an industrial estate just outside the city had its business rates cut by 10 per cent.

Pubs need support from you where energy costs are concerned: heating and lighting a pub is an expensive business and publicans would welcome a freeze or cut where gas and electricity are concerned.

This is equally true for small breweries. This country has seen a remarkable growth in their numbers in recent years. With around 2,000, we now have more breweries per head of population than any other country. But the domination of production by a handful of global producers distorts the market by undercutting smaller brewers and offering deep discounts to supermarkets.

As the number of closures in 2022 show, many small brewers are struggling to survive. There was great distress last year when one of the pioneers of the craft brewing movement, Kelham Island in Sheffield, closed after 32 years of brewing award-winning ales.

Ed Wickett, the manager of the family firm, said he had no option but to close as a result of the horrendous cost of gas, fuel, malt, hops and delivery charges. He said: “If you tell publicans that a cask of beer that cost £75 last month is now £85, they put the phone down on you.”

The small brewers look to you for help with their energy and fuel bills. When a brewery closes, employees lose their jobs – which amounts to a loss for the Treasury -- and consumers have less choice in pubs.

Britain is a great brewing nation. While the rest of the world is dominated by pale lager beers, Britain rests on the laurels of its proud history of India Pale Ale, mild, bitter and more modern golden ales. That tradition is now at risk as smaller breweries go out of business.

Our pubs and beer attract more than local people. As tourist experts will tell you, many people visit London for three main reasons: to see Buckingham Palace, ride on a red bus… and visit a pub to drink British beer.

You can come to the aid of embattled pubs and breweries by following the example of France, where President Macron has raised 165 million euro to invest in traditional cafes. He describes them as “the beating hearts of our neighbourhoods”.

Fine words that find an echo here. Our pubs and small breweries are rooted in their communities. Please, Chancellor, let their hearts continue to beat.

Yours sincerely,

Roger Protz

First published in What's Brewing, March 2023