It’s not just frazzled commuters who’re suffering during the tube strike. London’s pubs – already under intolerable pressure from crushing business rates and burdensome and costly regulations – are taking another hit, says Emma McClarkin
Listening to the radio this morning pushed home the far-reaching impact of the tube strike. We heard about a mother’s two-and-a-half-hour ordeal to get her son to school, workers walking miles to the office after five failed attempts to board a bus, and a manager, after months of planning a corporate event, being forced to cancel because no one could get to the venue.
It’s not just frazzled commuters who suffer. London’s pubs – already under intolerable pressure from crushing business rates and burdensome and costly regulations – are taking another hit. For every cancelled event, every commuter who decides it’s easier to go home than go out, every group of friends who abandon a night in town, pubs – and the wider economy – will keenly feel that hit.
London is a city that is, in so many ways, built around its social infrastructure and nightlife. Tourists visit – and Londoners and commuters stay here – for the capital’s world-famous theatres, clubs, restaurants and, yes, pubs.
On average, London’s pub scene generates £52m in GVA between Monday and Thursday – a significant sum that not only boosts the economy but represents the jobs and wider high streets that benefit from this trade. For an industry already walking a financial tightrope, strikes like these aren’t just inconvenient, they can be an existential threat.
Inflating costs
The irony is that just as tube disruption cuts revenues, new government measures are inflating costs. This year, the average price of a pint in London passed the £6 mark for the first time, climbing to £6.06 – nearly £1 above the national average of £5.01. That’s not profiteering; it’s survival.
Why the jump? Because running a pub has become dramatically more expensive. Employers’ national insurance contributions rose in last year’s budget.
The increase in the National Minimum and Living Wage disproportionately hits hospitality, one of the largest providers of entry-level jobs. Meanwhile, business rates relief has been slashed from 75 per cent to 40 per cent. For many licensees, this is the straw breaking the camel’s back.
Pubs make up just 0.4 per cent of national turnover but pay more than two per cent of all business rates
The business rates system in particular is indefensible. Pubs make up just 0.4 per cent of national turnover but pay more than two per cent of all business rates.
That distortion sucks an extra £500m a year out of the sector. Since the pandemic, successive Chancellors have admitted – tacitly, through temporary reliefs and freezes – that the system is broken. But tinkering at the edges is no substitute for reform.
The cost of delay is clear. More than 200 UK pubs closed in the first half of this year and the British Beer and Pub Association, which represents more than 20,000 pubs in the UK, estimates a total of 378 will close by the end of this year – the equivalent of a pub a day and at a cost of 5,600 direct jobs. That’s a brutal blow for not only livelihoods, but a loss for both tax revenue and growth.
The government knows this. The Chancellor has pledged to cut red tape, and she has said she wants to see sensible reforms that unlock growth and boost the country. The decision to cut duty on a draught pint last autumn was a welcome acknowledgement of the sector and its vital role in the economy, job market and society. Yet good intentions won’t support the government’s growth mission, nor help a pub pay its bills, let alone turn a profit.
This Autumn Budget must deliver for the sector. Comprehensive business rate reform as promised, a cut in beer duty, and a tax system that supports, rather than strangles, will not only keep Britain’s favourite social institution as the heart and soul of communities but mean more investment, jobs and growth.
Emma McClarkin is CEO of the British Beer and Pub Association