Minimum wage will increase by 7p

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By Gemma McKenna
12/05/2009 12:59

 

Minimum wage will rise by 7p to £5.80 an hour from October, the Government announced today.

The rate for 18 to 21-year-olds will go up by 6p to £4.83 and for 16 and 17-year-olds it will increase by 4p to £3.57.

Business Secretary Lord Mandelson said: “The Low Pay Commission has carefully examined the latest economic data before making their recommendations on the minimum wage rate, balancing the needs of workers and businesses in the current economic climate.”

The move was welcomed by Tony Payne, chief executive of the Federation of Licensed Victuallers Associations, who said: “We appreciate wages have to go up, even in a recession, and I think 7p should be manageable. We want to make sure that pub staff are looked after.”

He said he was quite sure businesses could afford it, and added that quite a lot of licensees already pay over the minimum wage.

John Cridland, the deputy director-general of the Confederation of British Industry, said: “This moderate increase recognizes that many businesses are struggling, and helps protect jobs at a time of rising unemployment.”

The news comes shortly after the Government announced that from October, employers would be banned from using tips and service charges to “top up” staff pay to meet the minimum wage.

Trade rocked by further 2% duty hike

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By Ewan Turney
22/04/2009 12:30

Chancellor Alistair Darling has stuck to his guns and increased duty by 2% from midnight tonight.

The pub and brewing industry has lobbied hard, in the form of the Axe the Tax campaign, but the pleas for a duty freeze have fallen on deaf ears once again.

The hike is a further body blow to a beleaguered industry battered by Government regulation and taxation.

Last year, Darling stunned the trade not once, but twice with a combined duty rise of a mammouth 18% and promised further 2% above inflation duty escalator increases for the next four years.

The Chancellor confirmed that the VAT level would increase in December following the 2.5% cut in November, which will spark a further increase in prices as the 8% duty hike introduced to off-set the VAT drop on alcohol is permanent.

The British Beer and Pub Association has warned that a record 39 pubs are closing every week and that 44,000 jobs have been cut from 2000 to 2005 — and a further 75,000 are now at risk.

Death warrant for pubs

“Today’s Budget signs the death warrant for thousands of Britain’s pubs and for tens of thousands of British jobs," said British Beer and Pub Association director of communications Mark Hastings.

“Pubs play a vital role in the economy and in local communities. Yet six are closing every day and more than 2,000 have gone in the last 12 months alone. The Chancellor’s unfair and unjustified announcement today condemns thousands more to shut for good.

“In imposing these additional beer taxes, the Government has wilfully ignored the views of the public, landlords, consumer groups, industry representatives and MPs from all parties who have been calling for action to save the British pub.

“At a time when the rest of the economy is getting a supporting hand, the beer and pub industry is being singled out for punitive action.

"Last year the Chancellor raised beer tax by an eye-watering 18%. Today's rise is a further body blow. The result will be more pubs closing, more jobs being lost and more people consuming alcohol outside supervised, licensed premises."

Disappointing

Mike Benner, chief executive of the Campaign for Real Ale, said: "It is disappointing that the Chancellor has ignored widespread public concern about the plight of Britain’s pubs and decided to press ahead with an increase which will result in yet more valued community pubs closing down.

"Well-run community pubs are already struggling as a result of last year’s 18% increase in beer duty and the recession. This further beer duty increase will push more valued pubs over the edge resulting in job losses, reduced Government tax revenue and many more deprived of their favourite local pub.”

He added: "Well-run pubs provide an enjoyable and affordable night out in a safe and supervised environment and this duty increase will simply fuel irresponsible drinking of cheap discount alcohol in people’s homes, public parks and on the streets.”

Wine & Spirit Trade Association chief executive Jeremy Beadles said: "At a time when the Government is offering other industries a helping hand it is extraordinary that it wishes to hurt the drinks industry with further tax increases.

"Thousands of jobs have already been lost in the industry and the decision to go ahead with a further tax increase puts thousands more at risk. It's a bitter irony that with falling sales, these tax hikes are unlikely to deliver the revenues forecast by the Treasury."

Tory leader David Cameron criticised the hikes. "The tax on beer will hit every drinker in every pub in Britain."

Government acts on rates burden

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The Government has agreed to reduce increases in business rates and help licensees hit by the scrapping of transitional rate relief.

Darling: plans to ease cash flow

The 5% increase for this financial year has been cut to 2%. Licensees will be able to defer payment of 60% of the increase of their rates bill for 2009/2010 until 2010/2011 and 2011/2012.

It comes as licensees complain to the MA about huge hikes in business rates of up to 550% with the scrapping of transitional relief.

Local authorities are set to write to businesses once the regulations are in place, which is expected to be at the end of July. Half of the deferred amount could be paid in 2010/2011 and the other half in the following year.

Announcing the decision to cut the increase in business rates, Darling told Parliament: “I am very conscious of the fact that businesses in this country were faced with an increase to business rates of 5% simply because the increase in business rates is linked to the rate of RPI inflation last autumn.

“But RPI inflation has now fallen to 0% in the last month and it is expected that it will fall further than that. So I want to bring forward a measure that will help businesses.”

Martin Roslyn Managing Director of The Pub Accounting Company said: “We welcome this last-minute move by the government to back down on what could have been a crippling increase in business rates for small businesses during what is already a very challenging climate. However, due to the last-minute nature of this decision, many small businesses will be left with more red tape in order to agree revised payment plans with their local councils.”

Treasury: no plans to drop beer duty

By Ewan Turney

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The Government has said it has "no plans" to drop its Pre-Budget 8% rise in beer duty — even when the VAT rate returns to 17.5%.

Angela Eagle and Alistair Darling: pubs will benefit from VAT cut

Chancellor Alistair Darling announced the second duty rise in November to off-set the 2.5% cut in VAT. But while the VAT reduction lasts for 13 months, the duty rise is permanent with the threat of a 2% above inflation duty escalator to come in April.

In a letter to Peter Harvey of the Winking Man pub in Upper Hulme, Staffordshire, Treasury minister Ann Mathers said: "Alcohol duty is an important revenue stream for the Government and there are currently no plans to change what was announced in the Pre-Budget Report 2008, though with all taxes, alcohol duty rates will be kept under review."

She added: "The alcohol industry will benefit from the positive effect of the fiscal stimulus on the economy and hence on consumption, for example with the reduction in VAT, households will have, on average, an additional £275 to spend or save a year."

Harvey said: "In general I think it is disgusting the way this Government is treating small businesses. It is not just our trade — they have killed off farming and it looks like pubs are next.

"They are not listening. I wish more people would stand up and have their say against this Government."

Licensees across the country are receiving rates bills up to 550% higher than last year.

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Rate hikes are hitting pubs hard

The shock rises are a result of the Government scrapping transitional rate relief, a move that affects bills from 1 April 2009.

According to the Local Government Association, £100m a year of transitional relief used to be available to businesses. They must now pay their full liability.

Thousands of firms had been paying reduced bills for years — thanks to transitional relief, which has been in place since 1990.

The LGA is calling for the extension of the relief to protect worst-affected businesses. The Government announced relief would end in 2004, but those who took on pubs after this could be taken unawares.

Adrienne King, of the Marston’s-owned Red Lion in Gilmorton, Leics, took over her pub in May 2006. Her bill jumps from £169 to £922 per month — a 546% rise.

“This could put me out of business,” said King. “The difference is about the amount of profit I was expecting to make this year.”

At the Dovecote Inn, in Laxton, Notts, David Brown’s monthly bill increased by 300%, from £418 to £1,273. “We hold out little hope of any reduction or relief. A letter has been sent to our MP and we also plan to write to Prince Charles as patron of Pub is the Hub — our pub is one of a handful owned by the Crown Estate.”

Last week MA reported that Peter Wilson, host of Enterprise Inns-owned Hare & Hounds in Worthing, wrote to the Chancellor about the £8,855.84 added to his bill. He has now also written to Shadow Cabinet member William Hague, who is “very interested”.

Margaret Eaton, chairwoman of the LGA, said: “It’s clear that a decision about ending this relief was made while the economy was still booming.

“In the new environment, it’s not realistic to expect many businesses to deal with this sharp rise.”

Tony Payne, chief executive of the Federation of Licensed Victuallers Associations, said: “Government says it wants to help small firms, and all the time it’s another kick in the teeth. They should reconsider to keep some businesses open.”

Edward Wright, partner at chartered surveyors Lawrence Tattersall, said many licensees had been in touch: “It’s a very nasty problem. It’s been a bit of a time bomb.”

Although businesses can’t appeal against the loss of transitional relief, some could mitigate its effects by appealing the rateable value of their pubs in the light of the smoking ban.

Statutory Sick Pay

Rate from 6 April 2009

The fixed weekly rate from 6 April 2009 has been confirmed at £79.15.

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Buying a Pub with the help of one of the UKs leading Pub Accountants.

 

Whether buying a pub or considering buying a pub with a lease you need to do your homework first. Look at the local area, pubs, clubs and hotels. How are they trading, what price are they selling products for? Get talking to local landlords, find out the history of the pub you're going to buy and it's reputation.

When buying a pub obtain recent accounts from the seller and barrelage figures from the brewery. Many prospective licensees forget to ask about rates, these can be up to £1000 per week and can be a reason for not buying a pub.

Produce a business plan – what are you going to do to make the unit work?

When buying a pub you should think about:

· local competition,

· refurbishment,

· promotions and new products etc.

Once you have produced this you should then prepare a profit and loss forecast/cash flow forecast with the help of Roslyn's specialised pub accountants – if we are lucky enough to obtain your business when you move in we prepare profit & loss and cash flow forecasts free of charge!

If you are signing a lease or buying a pub ensure you have a survey completed by a qualified person, in the event of areas of concern becoming known. It doesn't mean that you should avoid buying a pub, just negotiate with the brewery/pub company so that they remedy the faults or reduce the selling price so that you can.

Buying a pub/club/hotel is a time consuming business, you may well need assistance every step of the way. Roslyn's pub accountants will assist you with this giving advice, support, production of information – most of this (subject to certain conditions) is free of charge.

Using specified pub accountants is the first step in ensuring that your venture into buying a pub is a successful one. Pub accountants are able to assist you and give helpful relative advice every step of the way.

Running a pub is a rewarding business, offering good social life, and in a lot of situations a good profit, but you must get the right advice first.

Good Luck!!