IAS and CAMRA disagree about rising UK pub closures

Pub owners blame pub closures on the increasing affordability of alcohol over the last 30 years driven by low prices in the off-trade according to a report and survey by the Institute of Alcohol Studies (IAS). The IAS suggests pub closures could be rectified by the implementation of Minimum Unit Pricing (MUP).

The Campaign for Real Ale (CAMRA) instead reports that the explanation for the 18 pub closures a week in the UK it recorded was drinking establishments’ being subject to a combination of three key costs; the highest rates of beer duty in Europe, increasing business rates and VAT. CAMRA has called on the government to review the tax system to reduce this financial burden on pubs.

IAS’ February 2018 Rising Affordability Report notes that the general affordability of alcohol has increased by 60% since 1987. For the on-trade, which is primarily comprised of pubs and bars, affordability has increased by 31% for beer and 34% for spirits and wine in the same period. In comparison, for the off-trade, which represents supermarkets and off-licenses, affordability of beer has increased by 188% and of wine and spirits has risen by 131% over the period.

The gap between affordability in the off-trade and on-trade was halted between 2008 and 2012 when the UK Government increased taxes on alcohol. Following tax cuts after 2012 and macroeconomic recovery in the UK alcohol affordability has increased quickly; beer is 22% more affordable in 2018 compared with 2012 in the off-trade and on-trade.

The IAS’ report concludes that although taxation could slow growth in affordability, a more targeted approach is best. It recommends an MUP on the basis that it would eliminate super-cheap sales since prices would be set per unit of alcohol.

In the IAS Pub Quizzed survey, which was published in September 2017 and based on the opinions of pub managers across the UK, supermarket competition was seen as the single largest threat to pubs. Of the respondents, 48% ranked it as one of their top three concerns; 73% thought the low price of alcohol in supermarkets should be a governmental policy priority; 51% said increasing the price of supermarket alcohol was a solution that would support the pub industry; and 52% said increasing alcohol duty with 41% specifically favouring a MUP.

Institute of Alcohol Studies chief executive Katherine Brown said: “Evidence shows that as alcohol becomes more affordable, communities experience greater levels of harm. In England cheap alcohol is creating a huge burden on our NHS, police and public services with more than 1.2 million hospital admissions and one million crimes related to alcohol each year.

“These findings strengthen the case for minimum unit pricing, which would target the cheapest alcohol drunk by those causing damage to themselves and others without affecting the cost of a pint down the pub.”

CAMRA’s reported 18 pub closures per week in the UK was based upon data from its WhatPub guide, which covers 47,500 pubs across the country, representing approximately 95% of the total. The organisation concludes that the reasoning behind these closures is the three-fold financial burdens placed on pubs and this can rectified by a review of the tax system.

CAMRA’s national chairman Colin Valentine said in a statement: “Pubs are now facing a crippling tax burden, exacerbated by the perfect storm of the last business rates revaluation and a high level of beer duty. From these new pub closure figures, it is clear that a fundamental change is needed if the British pub is to survive for future generations.

“We can now look further afield for a new tax deal for the sector. This could include implementing the Australian model of having a lower rate of duty for beer sold in pubs, radically changing the business rates system, or charging a lower rate of VAT for pubs or, even better, all three.”

Statistics from the British Beer and Pub Association show that the number of UK pubs has declined by 15% between 2002 and 2015, representing a decline of 9,300 establishments.