TIM Martin, the ebullient boss of pub giant JD Wetherspoon, never disappoints a trade journalist in need of a quote.
Martin was in typically outspoken form when SLTN contacted him last week to chat about the firm’s interim results and its outlook for the year ahead.
Instead of waxing on about dividends and EBITDA (much to the relief of this correspondent) the pub chief went straight for the jugular and resumed his attack on current UK government tax policy.
Thanks to what Martin sees as the twin evils of VAT and alcohol duty, as well as other government levies such as rates and carbon tax, he said an astonishing 70% of the cost base now facing pubs comes in the guise of taxation.
I’ve not done the calculations myself, but presuming Martin has done his sums then this surely must be approaching an intolerable burden for the trade. And if it’s bad for a massive organisation like Wetherspoon, what must it be like for the independent?
Unfortunately, it doesn’t appear as if the government is in any mood to ease the overheads, at least not as far as duty is concerned. Despite Martin’s public hopes that the trade, in light of the lobbying efforts of groups like SIBA and the BBPA, could convince the Treasury to halt the duty escalator, many contacted by SLTN in the last few weeks were resigned to the prospect of yesterday’s Budget resulting in a further increase in drinks tax.
It’s not that I mean to be unduly pessimistic, or undermine the cogent arguments advanced by brewers and pub groups about the effects of duty (which, if more came yesterday, will have risen on beer by 42% since 2008) on jobs. I just can’t envisage a situation where MPs view the drinks industry as anything other than a source of revenue for the Treasury – and certainly not at a time when cost-cutting tops the agenda. That’s why I fear pubs will either be forced to ’don a hair-shirt’ or put up the price of a pint after this year’s Budget.
Meanwhile, just as Martin was confident he could appeal to the Chancellor’s sense of reason on duty, he was optimistic that what he sees as the VAT inequality between pubs and supermarkets will one day be eroded.
Martin, as we have reported before, has been among the most vociferous supporters for VAT to be cut to 5% for the hospitality trade, following the success of a similar campaign in France. In his view, it’s not fair that pubs have to pay VAT of 20% on food while supermarkets don’t.
Again, there’s plenty in here I support, and not least when you consider the growing percentage of alcohol sales now being transacted through the off-trade.
And there are other ways in which pub owners feel supermarkets have the edge, including when it comes to business rates in Scotland: why should the rates for pubs be based on turnover and not rateable value, as they are for shops? It’s an iniquity that means pubs pay about 9% of their turnover in rates, and supermarkets just 2%.
It’s clear, in my view, that there are numerous things government could do to help pubs – but so far rhetoric about the need to save them has not turned into action.
