Friday 22 March 2019

London gets screwed

Nowadays we're used to London being treated better than the rest of the UK. (Transport is a great example.) It's one of the reasons the country is in such a mess. But on the eve of WW I, it was London feeling disadvataged by new licence duties.

The 1909 Budget caused massive political unrest. Which ultimately led to reform of the House of Lords, when it was voted down by that house.  The Liberal government's proposals, conceived by chancellor David Lloyd George were quite progressive, introducing the first bits of the welfare state. Things like old age pensions. But they needed to be pais for.

One of the areas wher enew revenue was to be raised was from the drinks industry. But this time it wasn't to come from an increase in the tax on beer. Instead, licences were to be the source. Specifically brewing licences and pub licences.

"London and High Licences.
The National Trade Defence Association have issued a statement pointing out the eifect of the proposed licence duties in the administrative County of London, an area in which the Chancellor admits that the gross annual values on which the duties are to be paid approximate to the real values. The following figures are quoted, drawn from “Licensed Premises, 1909,” Return No. 1,255, May 7th, 1909, issued by the London County Council:—

Public-houses (4,742), gross annual value £1,576,266
Take, according to the Finance Bill, 50 per gross annual value per cent. of this value £788,133
Beerhouses (1,715), gross annual value £145,593
Take, according to the Finance Bill, one-third of this value £48,531
Total Future Duties £836,664

Public-houses (4,742) at an average gross annual value of £332 would pay an average licence duty of £40 £189,680
Beerhouses (1,715): (537 at £4 and 1,178 at £3 10s.) £6,271
Total Present Duties £195,931
Therefore the future duties will exceed the present duties by £640,713
Brewers' Journal, vol. 45, 1909, pages 413 - 414.
The average licence fee of a London fully-licensed was going to rise from £40 a year to £166.20 - a more than fourfold increase.  To put that into perspective, a pint of Mild cost 2d in the public bar. Assuming a generous 1d per pint profit for the publican, that's around 40,000 pints that would need to be sold just to pay for the licence. Or slightly more than 2.5 barrels per week.

The result of the new rules would leave London paying a disproportionate amount of the increase. Why? Because the new licence rate was based on the rateable value of the pub and those values were much higher in London than elsewhere.  Partly becasuse in London the rateable value was close to the rent which could be realistically obtained for the premises. While in most of the country the rateable value was a nominal sum.

Which meant London publicans got doubly screwed. Once, because property prices were high in London and again because the rateable values were high.

"The population in the administrative County of London is one-tenth of that of the United Kingdom.

The Chancellor of the Exchequer (the statement proceeds) in his Budget statement said that he expected to get an additional £2,600,000 from his new licence duties and his new brewers“ licences. Deducting £630,000 for brewers' licences and for duties to be levied on licensed premises other than public-houses and beerhouses, we have £2,000,000 as the additional amount to be obtained from the public-houses and the beerhouses of the United Kingdom. One-tenth of this sum is £230,000; instead of that, the administrative County of London will be called upon to pay £640,000. In the year ending March 31st, 1908, the yield of the licence duties was £2,222,359, from which must deducted the receipts for duties levied on licensed premises other than public-houses and beerhouses, and out of the total so reduced the administrative County of London paid £195,951, or approximately one-tenth of the whole.

The result may be summarised as follows:— London will pay a sum at least four times as large as the licence duties at the present time, and more than three times as large as the just share of the increased duties which should fall on London, measured either by population or by its share of the licence duties paid hitherto, and this in a district where the price of beer charged by the brewer is exceptionally low. These figures reveal such a startling inequality in the treatment of London that it is impossible to think that it can be left unredressed."
Brewers' Journal, vol. 45, 1909, pages 413 - 414.

I found this statement of note "the price of beer charged by the brewer is exceptionally low". That's not something that could be said of London nowadays.

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