Wetherspoons boss bemoans 'pernicious' tax and regulation

Tim Martin says pubs are getting a raw deal from the Government. Though Wetherspoons seems to be managing better than most...

by James Taylor
Last Updated: 19 Aug 2013
You can always rely on Wetherspoons boss Tim Martin for an anti-authority rant at results time, and today was no different: despite his pub chain posting record half-year sales of £525m, he took the opportunity to complain bitterly that 'this and the previous government have zealously increased taxes and regulation for pubs to levels which are, we believe, unsustainable.' Well at least you couldn't accuse him of being politically partisan...

Martin had some good numbers to illustrate his point. Wetherspoons made post-tax profits of around £22m during the period, but shelled out no less than £220m in taxes to the Government - including VAT, excise duty, PAYE and NI, property tax and corporation tax (which at £11m, represents a much higher proportion of profits than most of the banks seem to get away with these days). So Martin's beef is clear: this is forcing pubs to put up their prices, making them even less competitive with the cheap booze on sale at supermarkets.

In fact, he argues that Britain has become a 'high tax and regulation environment for business', as evidenced by the 'many thousands of closed pubs and other small businesses across Britain, as well as a marked increase in unemployment'. It's even more damaging because of all the other challenges facing consumer businesses at the moment, like rising input costs and the general fall in disposable income.

So what's the answer? Well, Martin reckons Britain could do a lot worse than copy what's happening in France, where both VAT and excise duties have been slashed - a move that he says has boosted both employment and tax receipts.

It's worth pointing out that Wetherspoons is not exactly doing badly, as those record sales indicate (and like-for-likes have been up nearly 3% since the new year). Purists tend to be sniffy about its pubs, but 238 have been recommended in the latest CAMRA Good Beer Guide, while it's on course to open another 50 during this financial year. And although its operating margin fell slightly, from 10% to 9.4%, that's still a pretty respectable number for an industry like this. Some of its rivals would kill for problems like these.

Here at MT we do have a soft spot for the good old English boozer, and it’s sad to see so many of them disappearing (if you haven’t already done so, check out this terrific elegy on the British pub from the Economist last year). So we have some sympathy for Martin’s point; this is definitely a sector that could do with a break. But will the Government heed his calls? Given the political awkwardness of providing financial support to the booze industry, Martin probably shouldn’t hold his breath.

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