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Autumn Budget brings hope to British pubs

Autumn Budget brings hope to British pubs after thousands call time on the industry

Times have been tough for pub landlords and landladies. One of the hardest-hit sectors during the pandemic, British pubs have been closing at an alarming rate. But with consumer confidence growing and a promising new Budget from the Chancellor, are the bar room tables about to turn?

The stay-at-home lockdowns brought in to tackle the Covid-19 pandemic wreaked havoc for pubs. While some industries pivoted valiantly, Britain's trusty watering holes shrivelled on the vine.

Even when pubs started to open again, many had to run at half capacity due to social distancing measures. With mounting bills and falling profits, thousands of publicans were left with no choice but to close permanently.

According to research from GA and AlixPartners, almost 12,000 licensed premises closed for good between December 2019 and February 2021. This equates to an average closure rate of 30 per day.

While this figure includes nightclubs and restaurants, it gives some indication of the struggle pubs have been facing.

Borrowing money to keep trading

We've heard many stories from UKBF members about the struggles publicans have faced throughout the pandemic.

One UKBF member borrowed £100,000 through the Coronavirus Business Interruption Loan Scheme and took out a £50,000 Bounce Back Loan. As business was still slow when repayments started, the member is struggling to keep up with payments and is considering liquidation.

UKBF member Ansuper posted: 'I'm now 50 and this pub was handed to me through three generations. It's been my life and I just don't want to leave it but I feel like I have no choice. I just know I need to walk away from these stupid high levels of debt that I just cannot repay.'

But hope is on the horizon. In the Autumn Budget, Chancellor Rishi Sunak unveiled a host of measures to help save British pubs.

How will the Budget affect pubs?

In his Autumn Budget, Sunak announced the 'biggest cut to beer duty for 50 years' and the 'biggest cut to fruit ciders in a generation'.

He also pledged a 50% business rates discount for pubs and other hospitality venues. Eligible businesses will see the tax on their premises slashed for one year, up to a value of £110,000.

To encourage people to drink in pubs, Mr Sunak announced 'draught relief', a 5% cut in duty on draught beer and cider served from containers over 40 litres. The duty cut will reduce the cost of an average pint by 3p, or as much as 25p for beer below 3.5% ABV. This will particularly benefit community pubs, who do 75% of their trade on draught, Sunak added.

Nik Antona, chairman of the Campaign for Real Ale (CAMRA), hailed the introduction of a draught relief as a 'game changer' that will pull consumption back into pubs and provide a much-needed boost to the industry.

Emma McClarkin, chief executive of the British Beer & Pub Association, said that overall the measures would help pubs recover from the pandemic. She welcomed the 50% cut to business rates and said it alone will save pubs £169 million.

However, Ms McClarkin warned that the cap of £110,000 on the business rates pledge means a significant number of pubs will not benefit from the relief at all. She also said that the overall beer duty rate in the UK remains amongst the highest in Europe and urged the Government to go further.

Mike Kill, chief executive of the Night-time Industries Association, said he was also disappointed that the chancellor chose not to extend the lower 12.5% rate of VAT for hospitality.

A few grumbles aside, the pub sector seems enlivened by the Autumn Budget. Ms McClarkin summarised the mood:

'Pub goers will also be toasting the Chancellor for announcing a 5% lower duty rate on draught beer worth £62 million. This is great news for our local pubs and recognises the crucial role they play in our economy and society.'

What extra support is available?

The Chancellor has promised more support to pubs in his Autumn Budget. Measures include a revaluation scheme to encourage businesses to adopt green technologies like solar panels.

There will also be a new 'business rates improvement relief', which means pubs can make more general property improvements and pay no extra business rates for 12 months. Both of these initiatives will come into force in 2023.

How much tax on a pint?

Beer Duty has three tax categories depending on its strength. If it's between 1.2% ABV and 2.8%, tax is 8.42p per litre. Between 2.8% and 7.5%, the rate is 19.08p. If the beer strength is more than 7.5%, the tax rate is 24.77p. You also pay standard rate VAT at 20% on alcohol.

In the past decade, the cost of a pint from a pub has gone up by almost 25%, from £3.10 in 2011 to £3.88 in 2021, according to Office for National Statistics figures analysed by pub industry publication the Morning Advertiser.

However, it is possible to buy a pack of four 568 ml cans in a supermarket for around £5.50, which equates to £1.38 per pint.

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