When it comes to deciding the Miscalculation of the Year Award in eleven months time it seems certain, even at this early stage, that the award will be won hands down by the publicans. Those among them who hit on the idea of slithering in an unjustifiable price increase within months of a general election need their heads examined. The own goal may have consequences for the trade which would not have featured in a publican's worst nightmare. And about time too.
Like many other trades - pharmacy, for example - the drinks business is over regulated to the detriment of competition. The price of this distortion is paid by the consumer and the taxman. The pub trade went through a tough period early in the decade when declining standards of living and mounting unemployment resulted in a sharp drop in pub takings. However, between 1994 and 1996 retail prices rose by the rate of inflation and half as much again; price increases are easily imposed when the full rigours of competition are missing. The lack of competition, of course, is nothing new. Over the last twenty years the price of a pint of stout in a pub has increased by 16 per cent over and above the intervening inflation. By comparison, the price of stout in off licences (where real competition exists) has dropped by 13 per cent in the same period.
The pub trade therefore has been systematically widening its profit margin, wherever possible, at the expense of the customer. The taxman has suffered too. Six years ago when the pint was £1.50 the publican got 35 per cent of the price and the taxman received 40 per cent. Nowadays the publican gets just over 40 per cent and the taxman gets 35 per cent. This wallet fattening is particularly easy in Dublin where the restrictions on new pub licences meet huge population growths head on. Satellite towns in west Dublin - Tallaght being a prime example have one pub for every 10,000 in population. The dearth of competition in the pub trade is thought to cost the economy some £400 million a year.
The fault for this cannot be laid exclusively at the publicans' door. Successive governments allowed the imbalance not just to continue but to worsen and politicians from all parties said nothing. This week it was different. The Taoiseach allowed it to be said that he was "apoplectic" about the price increase and took himself off to a pub for a high profile inspection. It makes one think that the election posters may be on the way to the printers.
The inquiry by the Competition Authority "from the malting house to the public house" as Mr Richard Bruton put it, will look in particular at "barriers to entry and the impact of the licensing laws on the structure of and behaviour in the market". The report will take months, but whoever is in government when the findings are completed must be prepared to take firm action. Hopefully the authority will recommend many new pub licences, freedom of all restaurants to have a full licence and an enlightened approach to closing time for nightclubs and sports clubs. The licensing laws truly are one of the great nonsenses of our time.