Leading article: Pubs and the cut-price penalty

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Given the overall state of the economy, pub chains generally are so far reporting reasonable results, and that includes JD Wetherspoon, which said yesterday that sales rose by almost 10 per cent last year, with a rise of 3.6 per cent in the three months to 15 January. But that does not mean that Wetherspoon's chairman, Tim Martin, does not have a point when he complains about the disparity between prices in supermarkets and prices in pubs.

Of course, there is an element of special pleading. What publican does not believe that there would be more of a buzz in the bar if the price gap between a pint drawn there and one carted home from the supermarket were not much narrower than it is? Nor is it right to blame only differential pricing, high alcohol duties and the VAT that has to be charged on pub food, for the thousands of pub closures in recent years.

Many factors are contributing to the pub's decline. The trend for villages to become dormitories for bigger cities, or primarily weekend haunts; the longer hours worked by many who have jobs; the fall in disposable income, and the ban on smoking in public places. But there are also many pubs and chains, including Wetherspoon's, that have successfully adapted their appeal to new markets – young urban workers, say, or families on a day out.

All that said, however, there is a logical, business and health case for looking again at the very big difference between the prices charged for drink in supermarkets and those in restaurants and pubs. Many supermarkets clearly use alcohol, especially beer, as a loss-leader, and one way they can do this – as Tim Martin argues – is by cross-subsidising from their VAT-free food. This only exacerbates the price difference, encouraging people not only to stay away from the pub, but to tank up on cheap supermarket alcohol before a night out – which additionally deprives pubs and clubs of sales, while doing nothing to stem binge drinking.

Cheap supermarket beer is by no means the only problem pubs face, but it is one that can and should be addressed. The pub remains a much-loved institution; it should be competing with other hostelries, not with Asda or Sainsbury's.

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