Dear Bernard Jenkin,
As a publican within your constituency I wrote to you and to George Osborne prior to the last budget regarding the Alcohol Duty Escalator. I received a short response from the treasury stating that the contents of my letter had been registered with no further action or correspondence. I also received a short dismissive letter from your office stating that neither a reduction in duty, a halt to the duty escalator or a reduction in VAT for the hospitality industry were on your agenda.
Since that time the planned 2% above inflation rise in duty has happened and business within the pub industry has not grown any easier. There are many factors affecting trading in these tough economic times with the crippling Alcohol Duty being a major contributor. We pay more alcohol duty per unit of alcohol than any country in the EU. I would like to suggest that this punitive taxation is not helping to increase treasury revenue as despite the increased sum of duty per unit you are losing vast amounts of VAT. This is partially because supermarkets are selling alcohol cheaply, many bulk buy deals are still under or around the 40p per unit price proposed for minimum pricing. A 40p per unit price should net the government coffers around 8p in VAT, however as they are selling below price it will be affecting their profits and in turn reducing their overall tax bill. The vast difference in price between the below cost alcohol sold in the supermarkets and the responsibly served drinks in pubs means more people are choosing to drink at home in these auspicious times.
As the average price of a pint in a pub is around the £3 mark, and the average pint (at 4% ABV) contains 2.3 units, the average unit of alcohol is being retailed up and down the country at £1.30 in pubs. This results in 22p per unit in VAT nearly 3 times that of the supermarket prices. Pubs also have a higher staff ratio than supermarkets meaning that if there are busier pubs we will be employing more staff per unit of alcohol served. This not only helps to decrease unemployment and reduce our vast benefits bill but will actually increase Government revenue through increased contributions to NI and income tax.
Standard Government reasons behind the duty escalator are two fold, firstly revenue, which I have just covered and shown to have flawed logic. The second reason that is flouted is for health benefits. As I have already discussed the increased duty and other pressures on pubs have made the safe, supervised drinking environment too expensive. We now have more and people drinking at home, drinking on the streets, drinking without any supervision. This can only lead to more health problems and more alcohol related crime. The money they were spending in the pub now gets them almost three times more booze to drink at home. Pubs are still closing at an alarming rate, forced out of business by the high prices they are required to charge to cover the ever increasing overheads.
I write this letter as the petition to scrap the Duty Escalator nears 100,000 signatures prompting a discussion in parliament. I write hoping that you take my points on board, that the 100,000 signatures we have collected result in more than a dismissed 20 minute backbench debate. Not only do pubs have the potential to raise vast amounts of tax revenue but we’ll do it while responsibly serving and monitoring those who drink within our establishments. We’ll do it while creating jobs, creating communities, creating entrepreneurs. We’ll do it while raising hundreds of thousand pounds for charity and while becoming a home from home for people from all walks of life, we are the backbone of your ‘Big Society’. We are well equipped to serve rural areas and the elderly generation ensuring that the community spirit brought about over the past year with the Jubilee and our summer of sport lives on.
In truth there are actually three things which will help pubs and in return help tax revenue. Abolition of the duty escalator and reduction in duty, reduction in VAT for hospitality businesses, as has happened across Europe with positive effects, and a minimum price on alcohol of at least 60p forcing supermarkets to sell alcohol more responsibly and above cost.
Please take a stand on behalf of all of the pubs & pub goers in your constituency; please take these points to parliament. I ask this of you as a resident, a business owner and a parish Councillor within your constituency. On behalf of my neighbours, my staff, my colleagues within the industry and my parish I hope you are listening.