Pubs issue warning of 5p extra on a pint as they raise fears of October beer tax raid
The British Beer & Pub Association (BBPA) has expressed its concern over rumours that the Chancellor is considering increasing beer duty in her October Budget. The BBPA argues that such a move would be detrimental to an industry already struggling, with many local pubs fighting for survival.
They warn that a 5% increase in duty could add 2p to the price of a pint, while a 10% rise could see an additional 5p added. They have not ruled out the possibility of raising taxes on beer, wine and spirits to address what Labour alleges is a £22 billion deficit in public finances, and it's understood that Treasury officials have presented documents suggesting that such increases could generate £800 million next year.
The BBPA is urging the Government to use the forthcoming Budget to reduce beer duty, reform business rates, and maintain the 75% business rates relief to help pubs and brewers retain staff and create more jobs. BBPA Chief Executive Emma McClarkin criticised the potential move, stating: "Rachel Reeves' plan to hike beer duty will be a bitter blow for our nation's brewers, pubs and beer drinkers. After the Chancellor's pre-election promise of a Five Point Plan for Pubs, it is impossible to see how this will be fulfilled if the price of a pint is increased by the Government."
She emphasised: "The cost of doing business has soared in recent years and, with potentially new punishing burdens, this tax increase is the last thing pubs and beer drinkers need. It makes it all the more vital that the Chancellor maintains the 75 percent business rates relief. Anything less will be a total betrayal of the great British pub that this government promised to protect, and the one million jobs that depend on them."
The BBPA warns that with a projected rise based on current duty on a 4.5 percent ABV draught pint, costs could climb from 49p to 51p with a 5 percent duty rise and to 54p if duty is hiked by 10 percent. The group pointed out that if publicans opt to withstand the increase themselves instead of passing it on to drinkers, this would reduce the average profit after costs for each pint sold down to a mere 7p.
Based on the latest figures from Oxford Economics and the BBPA, it's reported that the UK's beer and pub sector sloshed over £34.4 billion in Gross Value Added (GVA) into the economy and added more than £17.4 billion in taxes within a single year. Research found that the industry sustains 1,040,000 jobs, marking an upsurge of over 100,000 since before the pandemic.
A Localis think tank report reveals that eight out of 10 people agree pubs are social staples for bringing communities together, while three quarters acknowledge their local combats community loneliness. Miles Beale, the Chief Executive of the Wine and Spirits Trade Association (WSTA), says businesses are still grappling with the last increase in duties introduced by Rishi Sunak's government.
He stated: "Last year's damaging reforms to the alcohol excise duty system, including the largest single duty hike in almost 50 years, have hit businesses, consumers and the Government purse. Prices have risen, sales are down and so is duty income by over £1.3 billion. Increasing duty which is the Government's inherited policy will serve only to reduce income to the Government further at a time it can least afford it."
The WSTA is calling on the Chancellor to declare a two-year freeze in duties, which it believes would "keep prices stable while optimising government income".