LEADING UK pub chain JD Wetherspoon today launched a fresh attack on Scottish business rates.
It came as the company reported its results for the half-year to January 29.
Revenues were ahead by 3% to £916million compared to the same period in 2018-19 before the pandemic struck, while pre-tax profits were 17% ahead at £57million.
Chairman Tim Martin said this morning: “Trade for the last seven weeks was 9.1% above the equivalent period in full-year 2019 and 14.9% above the equivalent period in our last financial year.
“As reported last year, the company has a full complement of staff, although the labour market is competitive, with unemployment, in spite of economic problems, at approximately its lowest level in the last 50 or so years.
“Supply or delivery issues have largely disappeared, for now, and were probably a phenomenon of the stresses induced by the worldwide reopening after the pandemic, rather than a consequence of Brexit, as many commentators have argued.
Inflation
“Inflationary pressures in the pub industry, as many companies have said, have been ferocious, particularly in respect of energy, food and labour. The Bank of England, and other authorities, believe that inflation is on the wane, which will certainly be of great benefit, if correct.
“Having experienced a substantial improvement in sales and profits, compared to our most recent financial year, and with a strengthened balance sheet, compared both to last year and to the pre-pandemic period, the company is cautiously optimistic about further progress in the current financial year and in the years ahead.”
On the subject of Scottish business rates, Wetherspoon said: “Business rates are supposed to be based on the value of the building, rather than the level of trade of the tenant.
“This should mean that the rateable value per square foot is approximately the same for comparable pubs in similar locations.
“However, as a result of the valuation approach adopted by the government assessor in Scotland, Wetherspoon often pays far higher rates per square foot than its competitors.
“This is highlighted by assessments for the Omni Centre, a modern leisure complex in central Edinburgh, where Wetherspoon has been assessed at more than double the rate per square foot of the average of its competitors, and for The Centre in Livingston, a modern shopping centre, where a similar anomaly applies.
Another era
“As a result of applying valuation practice from another era, which assumed that pubs charged approximately the same prices, the raison d’etre of the rating system – that rates are based on property values, not the tenant’s trade – has been undermined.
“Similar issues are evident in Galashiels, Arbroath, Wick, Anniesland – and indeed most Wetherspoon pubs in Scotland.
“In effect, the application of the rating system in Scotland discriminates against businesses like Wetherspoon, which have lower prices, and encourages businesses to charge higher prices.
“As a result, consumers are likely to pay higher prices, which cannot be the intent of rating legislation.”
In January, Mr Martin said high streets and the age-old institution of the pub were being put at risk by “unfair” levels of tax.
He stated that the biggest threat to the hospitality industry was “the vast disparity in tax treatment between pubs and restaurants and supermarkets”.
The Wetherspoon chairman said supermarkets paid a zero VAT rate on food sales, whereas pubs and restaurants paid 20%, which in turn allowed supermarkets to subsidise the price of beer in their stores.
