Beer duty rises...again
The pub trade has been dealt another devastating blow — with the price of a pint set to rise another 10p — after the Chancellor stuck to plans to increase duty by 7.2%.
The rise in duty is the third price rise of the year after January's VAT hike and brewery rises in February.
George Osborne confirmed that duty on beer would rise 2% above inflation. It means that duty on a 4.2% abv beer is now 44p and VAT 51p — a total increase of 3.72p. The rise will take effect from midnight on Sunday.
Duty will be halved for beers below 2.8% abv and be 25% higher for beers above 7.2%.
Slim hopes
The trade had held out slim hopes for a reprieve on the grounds that a duty freeze could have saved over 10,000 jobs and generated £40m in extra tax revenue for the Government, according to research conducted by Oxford Economics on behalf of the British Beer and Pub Association.
"The Government is always forgetting that this industry employs over one million people — think what that 7.5% can do to jobs from the glass collector to the drayman," said Dave Daly, of Town and City pub the Castle Hotel in Blackpool.
"I will have to add about 10p to the price of a pint and people won't be happy to pay it — they will expect better service, security and entertainment. It means we're creeping up to the £4 mark, which is very worrying.
"We will grin and bear it because this industry is resilient and we are prepared for it and expect it. The Government does like to bash this industry but it will turn on them one day."
Insanity
Meanwhile, Steve Haslam, who operates four pubs, said: "Another hike is another nail in the coffin. They are treating beer as the new petrol and sooner or later they will have to stop — it's border-line insanity."
Haslam raised his prices in January to account for the brewers price rises, the VAT rise and the anticipated duty rise announced today.
"We added between 10 and 20p onto our prices in January. We might have to make a small adjustment. Everyone expects a rise after the Budget because it is well publicised so people don't beat you up about it."
Gregor Stevenson, owner of the Wheatsheaf in Maids Moreton, Buckinghamshire, said he would add 30p to a pint after holding prices despite the VAT and brewery increases.
"People will expect it, but everybody will revolt," he said. "It is a route for more pubs to shut — it's appalling. The more things like this, the worse life will be for publicans."
Lincolnshire-based multiple operator Michael Kheng said: "I just don't believe the Government. This won't make any difference to prices in the off-trade."
John Ellis, owner of the Crown Inn at Oakengates in Shropshire, said: "The difference between pubs and supermarkets will increase and drive people into supermarkets.
"A lot of pubs absorbed rises last year and they might not be able to this year. It will tip more pubs over the edge. I expect everyone to pass the rise on and fairly quickly."
Astonishing
Jonathan Neame, chief executive of Kent brewer and pub operator Shepherd Neame, labelled the news "absolutely astonishing" and said the Budget "doesn't help the community pub at all".
"It's very disappointing. From what's in the round a very upbeat Budget on focus jobs and growth, it seems to me that every part of the economy can benefit from this but the pub sector."
Also in the Budget
• The small business rate relief holiday is being extended by one year to October 2012, at a cost of £370m
• There will be a moratorium of three years for small business on "new domestic regulation"
• All planning bodies will be expected to prioritise jobs and growth
• Corporation Tax will be cut by 2%
• Income Tax relief on the Enterprise Investment Scheme will increase from 20% to 30% in April 2011
• Consultation on the merging of National Insurance and Income Tax
