VAT rise could cost 8,800 brewing jobs

Today's VAT increase could lead to the loss of more than 8,000 jobs in the brewing and pub sectors, according to a new report.

Research conducted by Oxford Economics suggests the hike in VAT from 17.5 per cent to 20 per cent, which came into effect at midnight, will result in 8,800 beer-related job losses, while any increase in beer duty in the forthcoming Budget will only make the situation worse.

The British Beer & Pub Association (BBPA) said that planned duty increases will add more than five pence to a pint of beer, and that a "typical pub pint" had broken the £3 barrier "for the first time".

Brigid Simmonds, the BBPA's chief executive, said today's VAT increase would add more than six pence to the price of a pint, on top of a 26 per cent rise in beer tax in the past two years.

The rises would hurt pubs, Simmons said, and encourage people to buy cheap beer from supermarkets and drink at home.

"Today's VAT rise is anther tax blow for the industry," Simmonds said. "The Treasury is piling tax on top of tax. The 26 per cent rise in beer duty in the past two years will now have an even higher VAT rate charged on top of it. The Treasury needs to think again when it comes to plans for further beer tax hikes in March."

"The government has recognised that tax increases harm pubs, and wants policies that don't damage the sector. Now is the time to translate this wish into action, with policies that keep pubs open, and create jobs and wealth in the UK economy."