Financial crisis and smoking ban forcing pubs to call time, MPs told

Financial crisis and smoking ban forcing pubs to call time, MPs told
10 December 2008
By Jonathan Reed
THE banking crisis and smoking ban have combined to hit the pub industry and force down the number which survive, MPs have been told.
The number of new pubs opening has "fallen off a cliff" in the past year as bank lending has dried up.

More pubs than expected have also closed because of the smoking ban, industry experts told the Commons Business Select Committee, and last night Chancellor Alistair Darling admitted the legislation had forced some out of business.

Yesterday two of the major pub companies were also dragged before the committee amid concern the conditions they impose make it increasingly difficult to make a living out of running a pub, forcing more to close.

The claims over the impact of the banking crisis and smoking ban were made as the committee investigates the pub industry, which is losing five establishments every day. The recent Government announcement of an increase in alcohol duties to counteract the temporary cut in VAT is feared to make things even worse.

Nick Bish, chief executive of the Association of Licensed Multiple Retailers, said the banking crisis was partly to blame for problems in the past year, with only 403 pubs opening up to September this year, compared to 1,035 in the full year in 2007.

"The banks shut up shop, actually, about a year ago and getting into the business has become much, much more arduous," he said.

Meanwhile the British Beer and Pub Association said it warned then-public health minister Caroline Flint before the smoking ban came in that it would result in 5,000 pubs closing.

Chief executive Rob Hayward said: "I think everything's gone to show it's accelerated that."

Later Mr Darling also admitted the smoking ban was a factor in the decline of pubs as he defended the decision to increase duties, saying he had done it for a reason – to keep the level of taxation on alcohol the same when VAT was cut.

The Chancellor said: "There's a lot of different things going on here. People's drinking habits are changing, people buy alcohol from the supermarkets, the smoking ban has made a difference."

Yesterday pub groups Punch Taverns and Enterprise Inns also faced a grilling from MPs, some of whom blame them for making it increasingly difficult for licensees to run them viably.

The British Beer and Pub Association said the industry was experiencing "one of the most severe and sustained periods of pressure on record".

Longer-term trends of people moving away from going to the pub have been "dramatically sharpened" by the economic downturn and exacerbated by tax and regulation changes, it added.

With communities increasingly losing their pub, a lifeline in rural areas, it wants the Government to scrap duty increases, enforce existing laws instead of creating new ones and to offer active support for the British pub.
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