THE price of a London pint could hit £14 within three years as pubs deal with higher energy bills, rising wages and increased beer prices from brewers.
The shocking findings come as drinkers face another six per cent rise in the cost of beer next year, meaning Londoners could be paying £8.48 for a pint.
The price of a London pint could hit £14 within three years due to soaring costs
A study from pension provider Penfold predicted it could rise to a sobering £13.98 by 2025
The most expensive pint in the country cost £8 in June.
But with intense cost pressures, a study from pension provider Penfold predicted it could rise to a sobering £13.98 by 2025.
Pub, restaurant and hotel chiefs wrote to Prime Minister Boris Johnson, Chancellor Nadhim Zahawi and Business secretary Kwasi Kwarteng this week warning of another wave of closures without urgent support for energy bills.
Just as businesses are enjoying a return of customers after low trade during the pandemic, rising energy bills and worries about another recession are hitting them even harder.
The hospitality industry accounts for ten per cent of the country’s jobs. But energy price caps don’t apply to businesses so many are facing a 300 per cent increase to bills when renewing their tariffs.
The British Beer and Pub Association has called for a cut to beer duty, reduced business rates for pubs and an urgent energy price cap for small businesses.
Higher energy costs, wages and supply chain challenges have meant 81 per cent of hospitality businesses have encountered product shortages, while almost three-quarters recorded “significant in- creases” in energy bills.
As a result, prices have escalated by nine per cent over the past year and are expected to shoot up by another six per cent in 2023.
Below, Wetherspoons chief Tim Martin – who is calling on the Government to help by cutting tax on food sold in pubs – gives his view.
Axe tax…or kill pubs, says Tim Martin
IN 1979, when Wetherspoon first opened its doors, pubs accounted for around 90 per cent of all beer consumed in the UK.
In those far-off days few people drank at home and pubs were the country’s main social melting pot.
Surveys showed that 50 per cent of people met their partner, husband or wife in their local — hard to imagine today. Pubs have a lot to answer for, you might say.
Fast forward to 2019 and things had changed. Even before the pandemic hit, pubs had lost half their beer trade to supermarkets.
And the pandemic, of course, accelerated the trend.
Supermarkets, which stayed open during the various national and regional lock-downs, temporarily grabbed 100 per cent, more or less, of beer sales.
We humans are creatures of habit, so once we had got used to drinking at home, on the beach, in the park or in a pal’s garden, it was far harder to persuade people to return to the pub than most imagined, especially given the whopping price advantage that supermarkets have.
Supermarkets can subsidise beer price
But what had caused the revered institution of the British pub to suffer such a catastrophic loss of trade, year after year, long before the pandemic?
Tax is the simple answer.
In 1979, pubs sold relatively little food, so few people noticed or complained when VAT, then eight per cent, was charged on food bought in pubs, whereas food bought in supermarkets was VAT-free.
However, food sales in pubs, reflecting an international trend towards eating out, gradually increased at the same time as VAT rocketed to today’s level of 20 per cent.
So, in effect, the tax break which benefited super- markets, became bigger and bigger.
With food at about a quarter to a half of total sales in most pubs, they had no alternative but to charge customers more, for both food and drink, than supermarkets.
The reality has been that supermarkets have been able to subsidise the selling price of beer (which is subject to 20 per cent VAT), using their VAT advantage on food.
And, as if that were not enough, pubs also pay far more in business rates per pint than supermarkets — around 25p a pint in pubs versus about 2p in supermarkets.
To be fair, the pub industry hasn’t much helped itself. Instead of campaigning for tax equality with supermarkets — fairness and equality are sound principles of taxation — the big pub companies, over the decades, have only campaigned for temporary help when the going gets tough, as it undoubtedly is today.
But when the going gets tough, it’s tough for everyone, so the public sees requests for favours in down turns as unjustifiable special pleading.
Instead of campaigning for temporary help, the big pub companies should campaign for equality, something everyone understands.
Let’s not beat about the bush.
If pubs are to survive and thrive in the future — generating a huge number of jobs as well as vast funds for the Treasury — they have to be treated fairly.
Fairness means tax equality with supermarkets.
Anything short of that means continuing decline for a once-great British institution.
‘Fairness means tax equality with supermarkets’, reveals Tim Martin
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