Pint Prices Set to Rise by 20p as Pub Chains Face Tax Hike

The price of a pint in pubs across the UK is set to rise by up to 20p following the Budget tax raid, as pub chains grapple with increased costs and tax hikes. The Chancellor's Budget, announced by Rachel Reeves, has left pub chains facing a substantial increase in costs, which they warn will be passed on to customers in the form of higher prices.

The Budget's measures, including a rise in the minimum wage and increases in jobs taxes, will raise the cost of employing full-time staff by at least £2,500 a year, according to an analysis released by industry trade body UKHospitality. This estimate accounts for a full-time worker aged 21 or over earning the National Living Wage (NLW) and working 38 hours weekly, including a rise in employer National Insurance Contributions (NICs) from £1,863 to £2,869, marking a 53.9 percent increase.



Kate Nicholls, chief executive of UKHospitality, said the higher costs could potentially push up prices by six percent. She admitted that businesses would try to avoid doing that, but if this increase was applied to the price of a pint of beer, that would take the average figure from £4.98 to £5.28.

Pub giants are warning of a six percent rise in prices driven by the Budget (
Image:
Getty)
She said: “The increase to employer NICs and, crucially, the lowering of the threshold left hospitality owners with a sleepless night as they came to terms with the enormous cost they will have to bear from April onwards. The new cost of employing core members of staff is eye watering – an increase of at least £2,500 is far, far beyond what anyone's worst-case scenario was.”

She added: “Hospitality is at the heart of our communities but the enormous value it delivers both socially and economically is under threat.”

The Institute for Fiscal Studies has noted that employers of National Living Wage workers will be hardest hit, with hospitality, a sector employing around 3.5 million people, set to experience a considerable impact. The budget's impact is predicted to be felt throughout the industry and is expected to influence business decisions over staffing, pricing, and investment.

Andrew Bewes, MD of Hallgarten & Novum Wines, said: “The enormity of this week’s Budget statement will not be lost on anybody in the trade.”

He said the pressure that wage and tax increases will place on the sector have created a “perfect storm” of inflationary pressures likely to affect both businesses and consumers. Shares in JD Wetherspoon dropped 11.4 percent, while shares in Marston’s fell 10.7 percent as the sector was hit by a rise in employers’ national insurance and a steep increase in the minimum wage. Fuller, Smith & Turner and Mitchells & Butlers shed more than six percent.

Shares in pub groups have plunged in recent days (
Image:
Getty)
Chris Jowsey, chief executive of Admiral Taverns, said higher staff costs together with a reduction in business rates relief from 75 percent to 40 percent from April, these costs “will come out of our future profits” and make some investments “harder to approve”.

Simon Dodd, chief executive of Aim-listed pub chain Young’s, which avoided a share price fall told the FT: “A double whammy of national living wage on top of the national insurance employer contribution is a very large cost to swallow for the sector. We want to talk about growth but we’re now at a stage where we’re talking about ‘what can we do to survive?’"

The Chancellor announced a reduction of one penny on a pint sold on draught in pubs in the Budget on Wednesday, but it seems this reduction will be more than wiped out by the impact of other measures. Reeves on Wednesday announced “a penny off the pint in the pub” as she cut duty on draught beer, but landlords said this reduction would be dwarfed by the impact of her other measures.

The British Beer and Pub Association said the “staggering extra costs” would add up to £500 million and “undermine growth and investment and risk people’s livelihoods”.

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Fears of 30p rise on a pint as Budget hikes hit pubs and hospitality
The Budget’s measures, including a rise in the minimum wage and increases in jobs taxes, will raise the cost of employing full-time staff by at least £2,500 a year, according to an analysis released by industry trade body UKHospitality
The Institute for Fiscal Studies has noted that employers of National Living Wage workers will be hardest hit
Pub giants are warning of a six percent rise in prices driven by the Budget which could add 30p to the price of a pint. Shares in pub groups have plunged in recent days as investors took account of the “staggering extra costs” faced by the industry.
The Budget’s measures including a rise in the minimum wage and increases in jobs taxes will raise the cost of employing full-time staff by at least £2,500 a year, according to an analysis released by industry trade body UKHospitality. The increase, which is based on a full-time worker aged 21 or over earning the National Living Wage (NLW) and working 38 hours weekly, includes a rise in employer National Insurance Contributions (NICs) from £1,863 to £2,869, marking a 53.9 percent hike.
The organisation’s chief executive, Kate Nicholls, said the higher costs could potentially push up prices by six percent. She said businesses would try to avoid doing that, but if this increase was applied to the price of a pint of beer, that would take the average figure from £4.98 to £5.28.
Pub giants are warning of a six percent rise in prices driven by the Budget (
Image:
Getty)
She said: “The increase to employer NICs and, crucially, the lowering of the threshold left hospitality owners with a sleepless night as they came to terms with the enormous cost they will have to bear from April onwards. The new cost of employing core members of staff is eye watering – an increase of at least £2,500 is far, far beyond what anyone’s worst-case scenario was.”
She added: “Hospitality is at the heart of our communities but the enormous value it delivers both socially and economically is under threat.”
The Institute for Fiscal Studies has noted that employers of National Living Wage workers will be hardest hit, with hospitality, a sector employing around 3.5 million people, set to experience a considerable impact. The budget’s impact is predicted to be felt throughout the industry and is expected to influence business decisions over staffing, pricing, and investment.
Andrew Bewes, MD of Hallgarten & Novum Wines, said: “The enormity of this week’s Budget statement will not be lost on anybody in the trade.”
He said the pressure that wage and tax increases will place on the sector have created a “perfect storm” of inflationary pressures likely to affect both businesses and consumers. Shares in JD Wetherspoon dropped 11.4 percent, while shares in Marston’s fell 10.7 percent as the sector was hit by a rise in employers’ national insurance and a steep increase in the minimum wage. Fuller, Smith & Turner and Mitchells & Butlers shed more than six percent.
Shares in pub groups have plunged in recent days (
Image:
Getty)
Chris Jowsey, chief executive of Admiral Taverns, said higher staff costs together with a reduction in business rates relief from 75 percent to 40 percent from April, these costs “will come out of our future profits” and make some investments “harder to approve”.
Simon Dodd, chief executive of Aim-listed pub chain Young’s, which avoided a share price fall told the FT: “A double whammy of national living wage on top of the national insurance employer contribution is a very large cost to swallow for the sector. We want to talk about growth but we’re now at a stage where we’re talking about ‘what can we do to survive?’"
The Chancellor announced a reduction of one penny on a pint sold on draught in pubs in the Budget on Wednesday, but it seems this reduction will be more than wiped out by the impact of other measures. Reeves on Wednesday announced “a penny off the pint in the pub” as she cut duty on draught beer, but landlords said this reduction would be dwarfed by the impact of her other measures.
The British Beer and Pub Association said the “staggering extra costs” would add up to £500 million and “undermine growth and investment and risk people’s livelihoods”.