Slash Tax and Scrap the Night Tsar's Salary to Save London's Nightlife

Leading UK think-tank calls for cuts to VAT and beer duty, the expansion of the night-tube and for the paid position of ‘Night Czar’ to be scrapped in order to boost London’s hospitality sector

London’s nightlife is in crisis. Over 3,000 venues have already closed their doors since the start of the pandemic, and punters are finding it almost impossible to simply get a pint after 11pm in the centre of our capital;

• A new paper from the Adam Smith Institute (ASI) shows that this decline is not inevitable;

• In the run-up to the local elections on the 2nd May, improving London’s nightlife should be a major focus for London Mayoral candidates, especially when appealing to younger voters;

• The ASI outlines a number of recommendations which, taken together, would make it safer, easier and cheaper to enjoy a night out in London, whilst supporting our hospitality sector;

• These include reducing burdensome costs on the hospitality sector, including VAT and beer duty, preventing local planning puritanism, and extending the night-tube;

• The ASI also calls for the £117,000 salary to be removed from the ‘London Night Czar,’ and for it to become an unpaid advisory position given to an industry expert, as it is in Greater Manchester.

London’s famous pubs, restaurants and theatres have attracted tourists and young professionals to the capital for centuries, and now generates £46 billion a year in the process.

But as a new paper from the Adam Smith Institute (ASI) highlights, today its hospitality sector is in crisis. Over 3,000 venues, including much-loved institutions such as G-A-Y and Printworks, have closed since the pandemic, and the average pub’s profit now stands at a net margin of 3%, meaning that many are only just making enough money to stay open.

The sector is being stifled by sky-high operating costs and taxation, from increasing rents and business rates, to VAT, beer duty and local alcohol levies that some councils are imposing on top. And pubs and bars are being constrained by restrictive opening hours and limits on al fresco dining- often at the behest of a vocal minority of residents.

But decline is not inevitable. Politicians in local councils, in City Hall and in Westminster can reduce the burdens on the hospitality sector, and make it easier, cheaper and safer for all of us to enjoy a good night out. 

The ASI’s recommendations include:

1. Reduce sky-high costs for the hospitality sector

• VAT should be cut from 20% to 12.5%, helping businesses to stay afloat and to cut costs for consumers, as a similar policy has achieved in Lisbon;

• Beer duty should be slashed. Only around 7.5% of the price of a pint is kept as profit. A cut would ensure that a higher proportion would contribute to the long-term health of our beloved British pubs;

• Freeze, and in the long-term scrap, local alcohol levies. Currently some councils impose a late-night levy on establishments serving alcohol after midnight, on top of the duty and taxes they already pay.

  2.  Prevent local planning puritanism 

• Ensure that principle that already exists under UK planning law is enforced. Under the ‘agent of change’ principle, existing businesses should not have unreasonable restrictions placed on them as a result of new developments;

• But too often, residents in new developments are filing noise complaints against existing venues, which leads to councils unfairly amending operating licences;

• Ministers should conduct a review of restrictive planning and licensing rules in the city.

  3. Expand night-time London transport provision

• Provision of the Night Tube and late-night National Rail Services should be expanded. Currently, the Night Tube only covers 5 out of the 11 lines and does not run on Thursdays- the new Friday for many working professionals. Improving its coverage would help revellers get home safely- particularly women;

• Increase police presence at stations;

• Intervene to stop the harmful taxi tax. The imposition of VAT on private hire vehicles and taxis would make safe ways of getting home more expensive.

  4. Learn from Greater Manchester, which is known for its thriving nightlife

• Deliver better money for taxpayers by making the ‘London night czar’ an unpaid advisory role, filled by an industry expert;

• Learn from Greater Manchester’s more permissive attitude towards regulation.

The Rt Hon. Robert Jenrick, Member of Parliament for Newark and Bingham, said:

“London’s night-time economy is a huge national asset. But it has been increasingly stifled over the past few years by red tape and soaring operating costs, a problem which has been exacerbated by the Mayor of London, his overpaid and hapless night czar, and overzealous local councils.

So I’m delighted to welcome the Adam Smith Institute’s recommendations, which will make it safer, cheaper and easier for punters to enjoy a pint, and will reduce burdensome costs on our pubs, bars and restaurants.

By taking the liberalising approach they outline, we can show that we care about our hard-working young professionals, who deserve to enjoy themselves in a truly 24 hour city.”

Sam Bidwell, Director of the Next Generation Centre and report co-author said:

“Aside from the professional opportunities that the Capital affords, London’s famous nightlife scene is one of the main draws for working-age people. In an age of sky-high rents, it’s more important than ever to ensure that this great city delivers value for money - including by ensuring that its nightlife remains thriving and vibrant.

The example of Greater Manchester shows that the decline of London’s nightlife is not inevitable. By reducing costs for the hospitality sector, slashing cumbersome red tape around planning and licensing, and expanding public transport provision, we can deliver the thriving nightlife offering that London’s young people deserve.”

-ENDS-

Notes to editors:

For further comment, or to arrange an interview, please contact emily@adamsmith.org | +44 7584778207

Sam Bidwell is the Director of the Adam Smith Institute’s Next Generation Centre. He has worked as a Parliamentary Researcher, and as a Press and Research Consultant for the Commonwealth Enterprise and Investment Council. He is a graduate of the University of Cambridge where he specialised in public law, jurisprudence, and legal history. 

Mimi Yates is the Director of Engagement and Operations at the Adam Smith Institute. She holds a first class degree in Philosophy from the University of Exeter and has formerly worked for Geneva Micro Labs, and led a non-profit organisation that focuses on street safety for women.

The Next Generation Centre is the Adam Smith Institute's policy initiative, which proposes bold new ideas, by young people and for young people. Alongside building on the ASI's existing body of work on how and why our current economic model is failing for young people, the Centre commissions research from 'Next Generation' fellows, building lasting relationships with the policy-makers of the future.

The Adam Smith Institute is a free market think tank based in London. It advocates classically liberal public policies to create a richer, freer world.