Curmudgeon's "Opening Times" Column - January 2009
Concealed within the VAT cut was a body-blow to the pub trade
WHEN LEAKED reports suggested that Alastair Darling was going to make a temporary cut in VAT to stimulate economic activity, many people will have held out hope of a short-term boost for the beleaguered pub trade. It was disappointing, although not remotely surprising, that this proved to be a short-lived illusion, and he decided to raise alcohol duty by 8% to offset the cut in VAT. While this was supposedly only meant to maintain the existing retail price, in an embarrassing U-turn, the Chancellor recognised that the measures would actually increase the price of spirits, and halved the planned increase for that category within a day or two, a clear indication of the half-baked thinking behind the move. Also, given the way pub licensees often arrive at a retail price by applying a mark-up to the wholesale price, it could easily end up putting prices up in pubs too.
And what’s the betting that, when the VAT rate reverts to 17.5% at the end of this year, the duty rates won’t be reduced back to where they started? Combined with a 9% rise in duty in the last Budget and a likely rise of at least 4% in the next one, that will mean a hike in beer duty of over 20% in a year, something that inevitably is going to do severe damage to the pub trade.
Given the current depressed state of the economy, it would have been welcome if people had been given a bit of Christmas cheer from a temporary reduction in the price of drink, but that did not fit in with the miserablist agenda of the current government. There seems to be a total failure to recognise that well-run traditional pubs make a positive contribution to local communities and increase general social well-being, and indeed ministers give a growing impression of not understanding why people go to pubs in the first place, let alone why they might on occasions drink more than four units of alcohol at a sitting. While they claim to wish to support small businesses, it would be foolish to expect any respite for pubs in the coming year.
Ironically, the recession may save some pubs that had been vulnerable to redevelopment
THERE CAN be no doubt that the current recession is likely to lead to the closure of substantial numbers of pubs. But, ironically, it might end up being the saviour of a few. Especially in the south-east, but increasingly in other parts of the country, the past few years have seen pubs that were viable enough in themselves being closed because the site was more valuable for residential development. Now, though, with the demand for property having fallen through the floor, that is often no longer the case. One such is the Ryecroft Arms in Cheadle Hulme, the former Conway, that had been slated by Hydes for closure and redevelopment as sheltered accommodation. However, the local planning committee threw out the application, and now, with the rapid decline in the economic outlook, it is unlikely to be revived any day soon, thus giving the pub a new lease of life.
Hopefully Hydes will now be in a position to enhance the appeal of the pub so it has more chance of a long-term future. But it has to be said that many post-war estate pubs of this kind have never enjoyed the appeal of their older counterparts, despite having plenty of potential customers living nearby, and in the coming years they are likely to continue to interest developers.