Everybody knows that pubs are struggling, but the scale of closures in recent years has been eye-watering. Half of the 21,000 pubs that have disappeared since 1980 have been lost in the last eight years.
Cultural change can explain much of the long-term decline in pub-going, but it cannot explain the recent collapse. In Closing Time, a new IEA report, I estimate that at least 6,000 pubs have closed since 2006 as a direct result of taxation, regulation and falling real wages. The government is responsible for two, if not three, of these factors and the government could undo the damage with market-led reforms if it wanted to.
Drinkers have always been prepared to pay a premium for the experience of drinking in a pub, but it is not an experience they will buy at any price.
After several years of above-inflation rises in alcohol duty, British drinkers now pay 40 per cent of the EU’s entire alcohol tax bill. This, combined with VAT rising to 20 per cent, has made eating and drinking in a pub increasingly unaffordable for many. A significant cut in alcohol duty and a lower rate of VAT for food served in pubs and restaurants might not create Tony Blair’s ‘continental café culture’ but it would bring us closer towards continental prices.
The re-introduction of the alcohol duty escalator in 2008 added to the woes of pubs that were already struggling with the smoking ban of 2007 (or, in Scotland, 2006). No other factor correlates more closely with the collapse in pub numbers than the ‘smokefree’ legislation and it is now almost universally acknowledged that the ban has damaged many pubs, particularly those which are land-locked and ‘wet led’ (ie. dependent on the sale of drink rather than food).
The government could ease this burden by allowing pubs and private members clubs to accommodate smokers in a separate room – ‘the snug’, as it used to be known. This is how most civilised countries have approached the issue and only the tantrums of anti-smoking extremists prevent it from happening here.
If politicians are sincere in their concern for the British pub, their solutions should be derived from an understanding of the causes. Instead, goaded on by the suicidally counter-productive pressure group the Campaign for Real Ale, they pile government failure upon government failure. While late night levies and cumulative impact zones punish the successful, the pub preservation movement calls for minimum pricing, state regulation of rents and the effective destruction of the beer tie to help the doomed.
This is hopelessly misguided. More government is not the answer. There is a fundamental lack of demand for pubs as they currently exist.
Cultural change has certainly been an important factor, but culture does not exist in a vacuum and the decimation of British pubs, which are selling half as much beer as they did a decade ago, has been a social and economic tragedy of the government’s making.