As we approach the end of 2018, we can reflect on some positive times for brewing, pubs and hospitality. A long summer, a successful England team at the World Cup, a good Budget with a freeze in beer duty, help for any small business with a rateable value of less than £51,000, an increase in investment allowance, capital allowances for new builds, and a review of the Small Brewer Relief Scheme.
But, as we approach 2019, we are still struggling with uncertainty as we leave the European Union. There is fragile consumer confidence, while many of our teams in pubs and the wider hospitality sector are finding that their European colleagues are returning home. On top of that, there could be a migration policy which is likely to restrict the latter further. Businesses thrive on certainty and so a deal struck now will at least allow us to plan the next two years of transition. It is hard to predict, as I write, how that will turn out, though.
It is therefore more important than ever for our industry to pull together when it comes to the campaign to reduce the tax burden on pubs. That is where the launch of the Long Live the Local campaign, earlier this year, spearheaded by Britain’s Beer Alliance, with active support from ourselves at the BBPA and other industry bodies, has made a real difference to our sector.
The Long Live the Local campaign celebrates the important social, economic and cultural role that pubs play in our communities, but also highlights the jeopardy that local pubs face from a range of tax pressures. The campaign created a groundswell of public support that heaped pressure on politicians. Over 115,000 people signed the petition to cut beer tax in the Budget, with a further 48,000 writing to their local MP to show their support for the campaign. Long Live the Local will continue next year, but let us hope that we do not face a no-deal Brexit requiring a Spring Budget to raise funds. Pubs are over taxed; we pay almost the highest beer duty in Europe and 2.8 per cent of the UK’s business rates bill, which, in relation to turnover, is almost double of any other sector which pays business rates. We need a root and branch review of business rates, but I cannot see this being a priority until after the next general election, whenever this may be.
Skills are key to pubs and the hospitality sector as a whole. Pubs are third on the list of things to do for visitors to the UK and very important to our domestic tourist market, too. We therefore need good, well-motivated and well-trained staff to attract tourists to visit pubs. I think there is a chance that the Government will offer a sector deal for tourism under their Industrial Strategy, which offers us, as an industry, to work together on a proper recruitment and retention campaign. When 24 per cent of your workforce is from overseas and even more in many metropolitan areas, we need to work together to find solutions. The semi-skilled definition of migration under “Tier 2” may be relaxed further, but unless the minimum salary limit of £30,000 is relaxed, few opportunities will exist for hospitality to take on overseas staff, so our work must be to recruit from the UK.
Brexit still presents many opportunities for our sector – not least to adjust the duty regime in ways which would help beer and pubs. Under EU law, it is not currently possible for the Government to charge a lower rate of duty on beer sold in pubs or on low strength beers up to 3.5 per cent ABV, something we would like the Government to examine as we gear up for the last phase of the Brexit process. Likewise, there are opportunities around VAT for the wider, but more closely defined, hospitality sector.
Our high streets should benefit from the £600 million pot identified in the Budget and a greater understanding of the benefits of local partnerships and local leadership. As ever in so much of what we do in the hospitality sector, the key thing is people. People standing up for their local communities, and people prepared to work at a local level to increase footfall and attract customers.
The year 2019 is very difficult to predict. However, if we can sign a deal with the EU, start working on policies which help our exports, raise our expectations of the quality of those who work in our industry, and convince the Government that no further regulations are necessary, then I am sure that we can make the year a success for our sector and hospitality, as a whole.