Pub operating costs soar

I posted yesterday about the All Party Parliamentary Beer Group report on the Community Pub Inquiry.

I've finished reading it and I think the most striking thing about the findings is just how complicated the whole issue of pub viability is. It is just not appropriate to simplify the issues in the way many do. I do believe that it is the best, almost unbiased report I have seen for some time into the overall pub industry and it's problems.

I hope over a series of pieces to try and distill the findings for the reader. But as I say, the overall issues are complex and I would urge anybody who is intent on complaining about beer being too expensive or this or that pub closing should first very carefully read the report.

Today I'm going to simply quote some costs at you. Costs that have escalated over the last 10 years or so.

The operating costs of the average pub are now around 45% of turnover - they used to be more like 32%

Of the operating costs 17% was wages in 1997 - it is now around 50%. This shows that minimum wage, leave entitlement, statutory sick pay and working time directive have had a significant effect as well as a whole raft of other employment laws.

Beer duty has gone up by 27%, whereas duty on wine has only gone up 16% and duty on spirits and ready to drink (RTD) spirit based drinks have only gone up by 3%. To me RTDs are a main catalyst of the increase of alcohol related social problems.

It used to cost a single £12 fee and an instant decision by the Licensing Justices to have a simple change to a licence, called a licence variation. For instance to open up or brick up a door. Now it probably costs £1000 and months of work. This is not helpful when pubs need to adapt to survive. Pubs have not got the resources or time to do this. For a small change the cost of legislation far outstrips the cost of the practical work.

The cost of legislation on pubs is astronomical and moreover the type of legislation is not appropriate. Take HACCAP for instance. This requires a member of the team to document trivia for the environmental (mental) health officer to look at and give the pub Brownie points. This distracts the sole trader from the kitchen where he is often the one ensuring the food is safe. A classic example of paperwork detracting from safety and at the same time making the small business almost impossible to run. It is though, not one single piece of legislation, but the whole raft that is put onto the industry in a one size fits all policy making system.

One recommendation is for the duty on draft beer to be reduced. Alternatively for the VAT on draft products to be decreased. Unfortunately the E.U. prevents that. At least that's what the economic Secretary to the Treasury claims.

It is striking that the report finds that the average profit for the licensee is only half of what he pays to the treasury in VAT and beer duty. This is before he pays his employees' NI and income tax.

I say it again - reader, yes you!! don't let the government ignore this very important piece of work done by the APPBG.