Cost of pint to rise 20p after Reeves tax hikes, pub boss warns

Brewer Young’s will lift its prices by 3.5 per cent following chancellor Rachel Reeves’s plan to increase tax on businesses.

The move will add about 20 pence to the price of a London pint, taking it to about ?6.50. A pint in the rest of the UK will be about 17 pence more.

A spokesperson said the company raises its prices each year and this time it needed to recoup increases in the national living wage, alcohol duty and the extra expense of national insurance contributions.

Ms Reeves said at the Budget last year that she will raise employers’ national insurance contributions in a bid to raise ?22bn for the Treasury.

Simon Dodd, CEO of Young’s said: “Looking ahead, whilst we remain mindful of the headwinds facing consumers and the wider issues that our industry will encounter from the increase in both national insurance contributions and the national living wage, our business is in great shape, and we continue to be optimistic about the year ahead.”

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Patrick Dardis, former CEO of Young’s, said the price rises are likely to be “just the start” as retail and hospitality businesses battle higher costs.

He said: “I think raising prices will not be sufficient to mitigate the cost of the national living wage and the national insurance increase. I think there will be a combination of price increases - and I see more than one price increase this year.”

A reduction in opening hours could be another option considered by pubs, he added.

He called for Ms Reeves to deliver some “credible” solutions to create economic growth: “What she has to do is take a deep breath and understand that by actually taxing work, taxing jobs, it is going to lead to higher unemployment and lower growth and higher inflation. So she has to tackle all three of those.”

Chief executive officer of Fuller’s, Simon Emeny, warned in November?that beer at his pubs and hotels?will rise in price by 10 pence.

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Mr Emeny’s concerns echoed those of Tim Martin, the boss of rival chain Wetherspoon’s, who in the wake of Ms Reeves’s budget said that he and his competitors will have to increase prices.

Trade body Hospitality UK has said NI and the minimum wage hike will add ?2,500 to the cost of employing a full-time staff member for its members each year.

According to the?Office for National Statistics, a pint of draught lager has grown in price from an average of 92 pence in February 1987 to ?4.82 in December of last year.

This rise is far faster than regular inflation. If the price of a pint had followed regular CPI inflation since 1987, it would cost ?2.61 today.

One of the biggest jumps in price came after the coronavirus. In March 2020, a pint cost just ?3.75.

But since then, the price of fuel has leapt, making brewing and moving?beer?around far more expensive.

It has also made heating pubs pricier and pushed up the price of labour as workers demand more pay to ease their own cost burdens.

As well as VAT at 20 per cent, drinkers pay duty which works out at about 46 pence a pint, depending on strength.

Draught beer is charged at a slightly lower rate than wine and spirits, while cider is less still, with about half the duty of draught beer for flat cider.

Campaigners have suggested simplifying the taxation scheme for alcohol to stop cider from being more attractive to problem drinkers.

Following news on Thursday that the economy had grown for the first time in three months, Ms Reeves said she will “fight every day to deliver” growth.

She told the Commons: “After 14 years of economic stagnation, this government’s number one mission is to grow our economy. I will fight every day to deliver that growth and put more money into working people’s pockets.”