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Morning Briefing Strap Line
Fri 22nd Sep 2017 - Friday Opinion
Subjects: The vicious circle of business rates, alcohol and students do mix, and Drinkers’ Voice
Authors: Kate Nicholls, Glynn Davis and Paul Chase

The vicious circle of business rates by Kate Nicholls

Business rates are a tax on property that is statutorily required to bring in the same amount of revenue each year in real terms – ie a cash increase every year. While more money is being collected, fewer properties are now paying the tax, increasing the tax burden per property, particularly on those located on high streets.

The reason for this is fairly obvious – a rapid move by business to online services. The clearest example is in retail but is also evident in banking, communications and other parts of our lives. I’m certainly not arguing this is necessarily a bad thing, but it does ask questions of a tax that last underwent any significant reform in the early 1990s and is based solely on property.

One of the main factors driving the switch to online, and away from high streets, is the escalating cost of business rates. The recent revaluation saw bigger rates increases for high-street businesses compared with out-of-town warehouses, so more businesses will leave the high street and perhaps cease trading from bricks and mortar properties altogether.

So, the cycle continues. More money needs to be raised from fewer properties, who then switch their business model so they are not so reliant on a physical location, meaning more money needs to be raised from even fewer properties, who are then squeezed by higher business rates costs. It is simply unsustainable.

The problem is exacerbated by well-intentioned measures to support small businesses and charities in particular. These businesses receive rates discounts of up to 100%, therefore diminishing further the number of businesses paying into the pot, and increasing the amount that others must pay. This is one of the drivers of the multi-charity shop high street (driven by rates discounts), whereas no other business seems to be succeeding.

In an ideal economic world, the increase in rates would see a fall in rents as a cyclical model evolves to supply and demand. However, this simply isn’t happening in the property market on high streets across the country. This is for a wide range of reasons, including the lack of supply of certain buildings, such as old, traditional pubs and the widespread use of upward only rent reviews in the commercial property market. The charity and small business discounts are also having an impact as they can afford to pay higher rents.

This week the Association of Licensed Multiple Retailers (ALMR) has submitted its evidence to the Treasury ahead of November’s Budget. It outlines a compelling case for wholesale reform of this outdated regime. The total rates bill for businesses in the eating and drinking out sector currently stands at £1.1bn. Businesses in our sector pay 4.5% of the total rates liability, yet account for just 1.1% of turnover. This works out as an overpayment of £890m every year.

Eating and drinking out is one of Britain’s most dynamic, innovative and resilient sectors. It has created one in seven of net new jobs and has grown by more than 5% per annum since 2010. ALMR members have driven a renaissance across high streets that are being squeezed by legislative pressure and increasing financial burdens. It is clear this situation cannot continue indefinitely, without gouging the heart of Britain’s high streets for good.

So, what can be done? The first step would be to slow the rise in the increase in the business rates pot – by either freezing the business rates tax rate or using the Consumer Price Index rate of inflation over the discredited Retail Price Index for uprating. The second, and most crucial, step would be to announce a full root-and-branch review of business rates. All the main parties had commitments to address the flaws and unfairness of the system in their election manifestos earlier this year. We now need action rather than words.

It is, at the very least, encouraging the chancellor recognises there is a problem, stating in the Spring Budget the government has “to find a better way of taxing the digital part of the economy”. Of course, this will take time and involve some difficult decisions but that is no reason to delay the process, and the forthcoming Budget is a prime opportunity to make a start.

Business rates must be reconstructed to mean just that – a tax on business rather than just property – if our sector can continue to play its leading role in the UK’s economic success.
Kate Nicholls is chief executive of the Association of Licensed Multiple Retailers, the leading voice for the eating and drinking out sector

Alcohol and students do mix by Glynn Davis

Who’d have believed it – 24% of students are hindering their career prospects by drinking excessively and 63% of these individuals have no idea what they would be doing after graduating. When I read this recently I think the author’s intention was for the reader to take these supposedly worrying findings seriously. Instead it had me running to my wife to tell her the humorous findings of this piece of research and share a laugh with her. This first bit of comedy was quantifying as excessive more than 20 units a week.
That equates to ten pints a week, which is 1.4 per day. Don’t worry – this is not going to be a lengthy discourse about the pros and cons of the units system because I’m simply going to state it is largely meaningless and based on similar principles as that of the “five-a-day” fruit and vegetable initiative. We have to have these things but the actual measurements are clearly not based on any sound scientific principles.
The second reason we both had a chuckle at the research (from was because if I cast my mind back to when I was a student, I’d have found it tough to have much of an idea about what I was going to be doing in an hour’s time, never mind two or three years.
Most worrying about such surveys and the way they are reported is the focus is invariably on the minority – the 24% in this case – and not on the majority. In this survey a hefty 58% of undergraduates stated they drink only once per week and consume no more than seven units. This particular survey then reported three-quarters of these people were very optimistic about securing employment within the next six months.
It doesn’t take a “first” from Oxbridge to work out the implication here is these 20 units per week power drinkers are destined to be society’s drifters or jobless while their near-teetotal classmates are heading on a path towards a glorious working career. The survey then puts the cherry on the (no doubt healthy) cake and states: “What seems clear is the work hard, play hard culture is not quite fit for purpose any more and it’s refreshing to see their drinking habits are more controlled than once was the case.”
While it certainly would be refreshing to have a depreciation in serious alcohol misuse, I’d argue many of these scaremongering surveys with their overzealous appreciation of “control” could be just as dangerous with their prohibition-type mantras as the substance they enjoy demonising.
Much more worrying is the inexorable rise of social media usage among 18 to 24-year-olds who are increasingly glued to their phones leading to rising levels of social awkwardness and, at the most extreme end, addiction. In a new book “The Hacking of the Mind” by Robert Lustig (a paediatric endocrinologist with a background in neuroscience) he puts forward an argument that digital addiction is leading to greater numbers of cases of depression. This has resulted in a record number of antidepressants being prescribed in England last year, according to the NHS.
There is a preference among this Generation Z grouping to update Facebook and communicate on Twitter rather than catch up with their real friends down the pub. Visiting their local is now well down the list of activities these individuals would choose to spend their time. I say we should be encouraging these youngsters to put down their screens and get down the pub and socialise. This is not with the intention of them glugging down excessive amounts of booze but more from a standpoint of promoting human interaction. Yes, alcohol is a convenient – and potentially dangerous if misused – lubricant but it should not be held up as the devil incarnate.
To suggest it is the determining factor behind the failure or success of students when they graduate is massively irresponsible. Maybe we should all lighten up a little and unburden our students from the high levels of expectation that we seem to have built up around them. Maybe we should even buy one a drink!
Glynn Davis is a leading commentator on retail trends

Drinkers’ Voice by Paul Chase

Back in 2013 I wrote a discussion paper titled “The Industry Perception – a Discussion”. In that paper, which I delivered to a group of trade body representatives and industry insiders, I made the following points – public and political perception of our industry is driven by individual experience of licensed premises, medical temperance campaigning, media distortion of issues and problems, and our failure to engage with the public in the alcohol and society debate.
And I indicated we were in this position because of a failure on two levels. Firstly, a failure to examine, analyse and deconstruct the medical temperance narrative, or to construct a counter-analysis regarding the causes of alcohol-related harms; and secondly a failure to recognise the serious nature of the resurgent temperance threat and lead a co-ordinated response to it.
The difficulty that others at the meeting pointed out to me is we, as an industry, are famously fragmented, so agreeing common positions on some of these issues was going to be difficult. There is no doubt since 2013 our trade bodies have recognised the serious threat posed by medical temperance and the constant litany of scare stories, dire warnings and phoney statistics that have accompanied their never-ending campaign to de-normalise the use of beverage alcohol. And there is now a coherent counter-narrative to medical temperance, which I have tried to play my own modest part in creating.
The difficulty in the past has been finding a suitable vehicle for expressing this narrative, particularly given the fact any drinks’ industry initiative would automatically be dissed as an attempt by “Big Alcohol” to promote its own agenda. What has been missing from the debate has been the voice of the ordinary drinker – until now.
Two weeks ago saw the launch of a new lobby group called Drinkers’ Voice. This is a Campaign for Real Ale (CAMRA) initiative designed to give the ordinary, moderate drinker a voice in the alcohol and society debate. CAMRA is in an ideal position to launch this initiative precisely because it is the biggest consumer group in Europe, is often highly critical of big brewers and cannot possibly be portrayed as drinks’ industry shills. The initiative has begun well and Drinkers’ Voice provided the media with a poll that highlighted 70% of UK drinkers don’t take any notice of the chief medical officer’s revised drinking guidelines, because they’re not based on science and have no credibility with ordinary drinkers.
There have been articles on Drinkers’ Voice published in the Sun on Sunday, the Sunday Times and the Telegraph as well as a television appearance by Amy O’Callaghan, Drinkers’ Voice’s spokesperson, on Sunday Live. Drinkers’ Voice will be a grassroots organisation with spokespeople in communities across the country that are passionate about their freedom of choice and their right to drink in a sociable and moderate way. As Drinkers’ Voice put it itself:
“We believe it is important that people understand the benefits of drinking alcohol as part of a healthy lifestyle. We want people to talk about how enjoying a drink with friends enhances their wellbeing, and how scientific evidence shows that moderate drinking can help heart and cognitive health.”
And then: “You’ll know that for too long this debate has been dominated by the anti-alcohol lobby, which has sought to de-normalise drinking and restrict people’s access to alcohol. As a result, we have seen the UK’s alcohol guidelines reduced last year without credible evidence to justify it. As the poll shows, this has widened the gap between government’s instruction and people who want to just enjoy a drink.”
Creating a grassroots organisation of this kind is a bold move and CAMRA, and its chief executive Tim Page, are to be congratulated on taking the lead. To influence the wider alcohol policy debate we must influence the public opinion on which politicians’ ride. This is a fledgling organisation and it needs money. The decision has been made not to accept donations from the drinks’ industry, for obvious reasons. It is being crowdfunded by donation and if you would like to support Drinkers’ Voice as an individual you can donate here.

This initiative is needed, and long overdue. Please get behind it. Further information about Drinkers’ Voice is available on its website.
Paul Chase is director of CPL Training and a leading commentator on on-trade health and alcohol policy

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