Pubs are facing a significant financial burden compared to supermarkets when it comes to business rates, according to Wetherspoons’ CEO. Tim Martin, the founder, highlighted that pubs pay approximately 20 times more in business rates per pint of beer than supermarkets do. This tax discrepancy contributes to around 28p of the average £5 pint price in pubs, compared to only about 1.5p in supermarkets, allowing supermarkets to offer cheaper beer due to lower costs.
Martin pointed out that one reason supermarkets can sell beer at a lower price is that they do not pay VAT on food sales, unlike pubs that face a standard 20% VAT rate. This situation effectively enables supermarkets to subsidize the prices of alcoholic beverages. Consequently, pubs have lost about 50% of their beer trade to supermarkets since 2000, leading to a challenging environment for the pub industry and high streets.
In response to the issue, Greene King, a prominent pub and brewing company, proposed reforms to base business rates on profits, aiming to address the unfair tax burden on pubs. However, Martin expressed skepticism about this approach, suggesting that it might not be the most effective solution.
The ongoing campaign “Your Pub Needs You” by the Mirror advocates for government support for struggling pubs, recognition of pubs that contribute positively to their communities, and assistance for community groups looking to acquire local pubs. Recent data from the Campaign for Real Ale (Camra) revealed that nearly five pubs shut down permanently each week in the UK, with over 600 establishments remaining vacant long-term, totaling almost 5,000 closures since 2016.
Despite industry challenges, Wetherspoons defies the trend with plans to open approximately 30 new pubs in the next year, marking its most significant expansion in a decade. The chain, which currently operates 794 pubs, has experienced closures in recent years but remains committed to growth and development in the sector.
