More pubs set to close as VAT hike bites warns GMB union

The number of pubs shutting their doors for the final time could gather pace following the hike in VAT, union officials yesterday warned.

It follows the release of official data showing a sharp fall in beer volumes in the year to October.

During the period, the amount of beer released for consumption in the "on trade" was down by 6.3 per cent on a year earlier, according to analysis of figures from HM Revenue & Customs (HMRC).

The GMB union noted that this was some 38 per cent below peak levels in 2002 and highlighted the potential impact of higher taxes and rents.

Hayley Brennan, a spokeswoman for the union's tied pub tenants, said: "GMB tied tenants are looking to January 2011 with dread as the VAT rise pushes up drink prices in pubs.

"The differential in the price of beer in supermarkets and pubs will widen even more. More pubs will close."

She added: "Beer sales fell again in the year to October with sales in the 'on trade' falling off a cliff - down 38 per cent from peak levels - as pubs are priced out of the market and close as a result of rents being too high.

"The regulatory authorities have done nothing to save tied tenants from market abuse by private equity inspired financial engineering of the property companies that own pubs."

Analysis also revealed that the volume of beer released for consumption in the "off trade" in the year to October was 0.1 per cent up on the levels recorded in the 12 months to October 2009.