The late night levy is an unwelcome new tax for Britain's struggling pubs
Is it fair for councils to charge licensed premises an extra tax to cover the costs of late night opening?
Not so long ago I wrote a blog post questioning how British pubs were expected to survive, with so many factors affecting their ability to build and sustain a successful business. Well, they received a boost at this year's budget when George Osborne announced that he would be scrapping the widely-derided beer duty escalator - but less than a month later the industry finds itself rallying against what it deems to be another unfair profit-gobbling tax.
The 'late night levy' allows local authorities to charge licensed premises an extra tax if they wish to keep their premises open beyond midnight. The levy will cost those pubs up to £4,440 a year. Seventy per cent of the funds generated by the levy will go towards police costs, while the remaining 30% will be retained by the council to pay for other activities such as street cleaning.
BBC Radio 4's Today programme reported yesterday that ten local authorities in the UK have confirmed they will be enforcing the late night levy, while a cursory Internet search shows that a number of councils are currently in consultation over the matter.
The North London borough of Islington is one area where the late night levy seems likely to come into force. Islington's Executive member for Community Safety Paul Convery gave his views on the levy to Radio 4's Justin Webb, saying a) there is extra financial strain that comes with late night opening, b) it's not a hugely significant amount of money to pay, and c) part of its aim is to incentivise licensed establishments to close their doors before midnight.
If a pub's future was in the balance, paying the late night levy could be the difference between survival and closure. If it wants to grow, the extra cost might be the factor that means projects are put on hold.
Brigid Simmons, the Chief Executive of the British Beer & Pub Association (BBPA), countered Convery's argument by highlighting the unfairness of the fact that every pub has to pay, regardless of whether or not its clientele are likely to cause any incidents that require police intervention. Simmons also reasoned that the terms of the charge do not state that police administrators are required to spend the extra revenue on the night-time economy, that the pub industry already injects £90bn into the UK economy every year, and that alcohol bought at cheaper prices in supermarkets and convenience stores - which constitutes 70 per cent of overall sales - also contributes heavily to the extra public cost of late-night drinking.
Perhaps most compellingly, however, Simmons questioned the fairness and wisdom of introducing more costs and more red tape to businesses that, despite recent good news, are still closing down at an alarming rate of 18 per week.
The yearly bill for licensed premises will range from £299 to £4,440.The amount a premises will be obliged to pay will be measured by its rateable value, with a multiplier applied to premises in upper brackets that primarily or exclusively sell alcohol.
The rateable value of a business is public information, so I used the Valuation Office Agency website to find out how much extra an Islington pub I know well will have to pay to stay open beyond midnight. Its current rateable value is £110,000, which puts it in the second highest bracket for the levy. The pub sells food - pretty good food actually - but it's mainly drinkers, not diners, that are there in the evening. So, I think the multiplier would apply - and this would mean an extra cost to the pub of £2,730 per year.
It's true that this isn't an earth-shattering amount of money, but if the pub's future was truly in the balance it's quite conceivable that paying the late night levy could be the difference between survival and closure. If the pub wants to improve and grow - by employing a new chef, let's say, or giving the place a makeover - the extra cost might be the factor that means projects are put on hold. Or, even if the pub is thriving and the landlord is taking out all the profit in wages, it's still nearly three grand that's not ending up in his or her back pocket.
Well, if the late night levy means an extra cost foryourpub, allow me to suggest an easy way to offset or, more than likely, eclipse it: allow Make It Cheaper to reduce some other costs on your behalf.
Pubs are businesses that can actually benefit from allthe free cost-saving services Make It Cheaper provides - they can reduce their energy bills, they can slash their chip and pin costs, they can get a better deal on their fixed telecoms and business mobiles and they can use our sister company Make It Cheaper Financial Services to source new business insurance policies and find a cheaper premium.
Do some or all of these and there's every chance the late night levy will effectively have no negative impact on your bottom line whatsoever - in fact, it may have prompted you into action that has the opposite effect.
Image credit: Ewan-M