Last week Chancellor George Osborne unveiled a raft of measures, including knocking 1p off beer duty for the third year in a row, cutting tax on cider, Scotch whisky and other spirits by 2% and freezing wine duty.
Other business-focused announcements included the abolition of national insurance (NI) contributions for the self-employed and young workers, the scrapping of the annual tax return from next year, a 20p hourly rate rise in the national minimum wage and the launch of new apprenticeship vouchers.
Although PMA readers generally welcomed the fact that the Government had recognised a need to help the industry through alcohol duty cuts, some questioned whether they would reap any benefit.
Incentive
Janet Dooner, licensee at the Railway Tavern, in Stratford, East London said: “Faffing around with 1p is a pain. I’ve got to stand on that till and change all my prices. I can’t reduce drinks by 1p straight away because I’m selling stock that I haven’t had a reduction on, but some people walk in and expect it to be cheaper. A 5p reduction would have been more significant and serve as an incentive to get people through the doors.”
Pub social media reaction - will you pass the duty cut on?
“As my buy-in prices have risen 4%, not to mention the increase in utilities and rates, the best case scenario for my customers is that we don’t raise prices for another few months."
“I’m not passing the duty cut on, most brewery prices have gone up 2.9%, utilities are up this year, minimum wage is going up, so I’m keeping prices as they are.”
“We have resisted most but not all price increases from our wholesaler. We continue to invest our own money to build the business. We will not be passing the decrease on and will explain it exactly in those terms to our customers if challenged.”
“Bowl of pennies on the bar with a note ‘Love from George, please take one’.”
“We still haven’t passed on the annual price hike from brewers but will factor in the duty cuts when we do.”
“Costs are going up, so rather than price per pint going down I am forced to put prices up. My locals won’t understand. These stories don’t do publicans any good in my view and make it look like we’re profiteering when the opposite is true!”
“I plan to hand over a one pence piece to any customer who orders a pint. I will do this for a month or two until the story passes.”
Claire Alexander, of the Ebrington Arms, Chipping Camden, Gloucestershire said: “What planet are MPs living on if they believe a 1p reduction makes any difference to pubs? It doesn’t. It might help pubcos get ever stronger but this should be about stopping the closure of about 30 pubs every week. Most importantly MPs need to stop planning loopholes and allowing supermarkets to do cheap offers our trade simply can’t compete with.
Unjustified
John Ellis, of the Crown Inn, Oakengates, Shropshire, warned that customers will expect prices to fall as a result of the cuts. “I did what I always do, which is to stuff the cellar with kegs that went up in February and March by many times the rate of inflation,” he said.
“This allowed me to buy time to see what the Budget effect would be, while looking around to consider what alternative products are available. The big breweries’ price increases were completely unjustified, so I will probably de-list some and switch products.”
Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers, said: “We always encourage our members to respond positively to changes in duty rates and we have certainly seen some innovative reactions — from a beer glass of pennies for customers to take their rebate, to price cuts on headline products.
Benefit
“But as duty is only one factor in determining retail prices and operators are dependent upon the pricing strategies of their suppliers. We encourage all to pass the benefit down the chain.”
Other licensees called on the Government for further support for pubs on business rates — a review is underway but ministers have already indicated the total amount collected from business will be the same meaning there will be winners and losers. Most were unsurprised by the 20p increase in the minimum wage and although many felt it a good idea in principle, they pointed out it would put further pressure on margins.