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As of February, the price of a draught pint will decrease by 1p due to a reduction in alcohol duty. This 1.7% tax decrease was the first alcohol duty cut in a decade and applies exclusively to the production of draught alcohol. However, some critics of the policy argue that this relief won’t necessarily translate into cheaper prices for customers. With increasing employer National Insurance contributions and minimum wage hikes, pub owners may choose to pass on the higher costs of running a business, leading to a net increase in prices instead of the projected decrease.
To combat the growing price of living, the government is also providing relief for craft alcohol producers, aimed at helping them compete with cheaper supermarket alternatives. The policy will apply to draught drinks with an alcohol-by-volume content of less than 8.5%, equating to a 1p decrease in tax on an average-strength pint. This relief will affect 60% of all alcohol sales in pubs. Another aspect of the government’s financial relief plan for alcohol producers is directed toward small craft brewers with products below 8.5% ABV. The relief program tapers off as alcohol content increases.
Despite these policies, critics argue that the tax reductions are not substantial enough to make up for the increases from higher employment costs. This spring, the minimum wage will rise by 6.7% for those age 21 and older to £12.21, while firms will face higher National Insurance contributions. Pub owners have estimated that the increase in employment expenses could drive prices up by as much as 40p per pint. This would deeply impact an industry that is already struggling; due to the cost of living, many individuals are choosing not to spend money at bars and pubs.
According to Tim Martin, CEO of Wetherspoons, increased employment costs could cost the company £80m per year. He stated that the budget’s announcements have a greater impact on pub and restaurant companies than on supermarkets and called out politicians for being more attuned to dinner parties than pubs. Despite opposition from some pub owners, unions have argued that rising wages are necessary to combat poverty in the face of corporate profit. As of now, the hospitality industry continues to suffer, with many establishments dealing with dwindling customer bases and struggling to make ends meet
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