Budget 2015: Publicans give lukewarm response

By Helen Gilbert

- Last updated on GMT

PMA readers would have liked further help in George Osborne's Budget
PMA readers would have liked further help in George Osborne's Budget

Related tags: Minimum wage

Licensees have given last week’s Budget a lukewarm reception with a number claiming the headline-grabbing cut in beer duty was unhelpful and support in other areas would have been more welcome.

Last week Chancellor George Osborne unveiled a raft of measures, including knocking 1p off beer duty for the third year in a row, cutting tax on cider, Scotch whisky and other spirits by 2% and freezing wine duty.

budget1507

Other business-focused announcements included the abolition of national insurance (NI) contributions for the self-employed and young workers, the scrapping of the annual tax return from next year, a 20p hourly rate rise in the national minimum wage and the launch of new apprenticeship vouchers.

Although PMA​ readers generally welcomed the fact that the Government had recognised a need to help the industry through alcohol duty cuts, some questioned whether they would reap any benefit.

Incentive

Janet Dooner, licensee at the Railway Tavern, in Stratford, East London said: “Faffing around with 1p is a pain. I’ve got to stand on that till and change all my prices. I can’t reduce drinks by 1p straight away because I’m selling stock that I haven’t had a reduction on, but some people walk in and expect it to be cheaper. A 5p reduction would have been more significant and serve as an incentive to get people through the doors.”

Pub social media reaction - will you pass the duty cut on?

“As my buy-in prices have risen 4%, not to mention the increase in utilities and rates, the best case scenario for my customers is that we don’t raise prices for another few months."

“I’m not passing the duty cut on, most brewery prices have gone up 2.9%, utilities are up this year, minimum wage is going up, so I’m keeping prices as they are.”

“We have resisted most but not all price increases from our wholesaler. We continue to invest our own money to build the business. We will not be passing the decrease on and will explain it exactly in those terms to our customers if challenged.”

“Bowl of pennies on the bar with a note ‘Love from George, please take one’.”

“We still haven’t passed on the annual price hike from brewers but will factor in the duty cuts when we do.”

“Costs are going up, so rather than price per pint going down I am forced to put prices up. My locals won’t understand. These stories don’t do publicans any good in my view and make it look like we’re profiteering when the opposite is true!”

“I plan to hand over a one pence piece to any customer who orders a pint. I will do this for a month or two until the story passes.”

Claire Alexander, of the Ebrington Arms, Chipping Camden, Gloucestershire said: “What planet are MPs living on if they believe a 1p reduction makes any difference to pubs? It doesn’t. It might help pubcos get ever stronger but this should be about stopping the closure of about 30 pubs every week. Most importantly MPs need to stop planning loopholes and allowing supermarkets to do cheap offers our trade simply can’t compete with.

Unjustified

John Ellis, of the Crown Inn, Oakengates, Shropshire, warned that customers will expect prices to fall as a result of the cuts. “I did what I always do, which is to stuff the cellar with kegs that went up in February and March by many times the rate of inflation,” he said.

“This allowed me to buy time to see what the Budget effect would be, while looking around to consider what alternative products are available. The big breweries’ price increases were completely unjustified, so I will probably de-list some and switch products.”

Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers, said: “We always encourage our members to respond positively to changes in duty rates and we have certainly seen some innovative reactions — from a beer glass of pennies for customers to take their rebate, to price cuts on headline products.

Benefit

“But as duty is only one factor in determining retail prices and operators are dependent upon the pricing strategies of their suppliers. We encourage all to pass the benefit down the chain.”

Other licensees called on the Government for further support for pubs on business rates — a review is underway but ministers have already indicated the total amount collected from business will be the same meaning there will be winners and losers. Most were unsurprised by the 20p increase in the minimum wage and although many felt it a good idea in principle, they pointed out it would put further pressure on margins.

Related topics: Legislation

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13 comments

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Alert noted

Posted by david,

Veritas, with 'Interested Observer' taking the trouble to tell us he is away on his hols, Northern Licensee steps very adequately into the role.

NL, this comment replies to your post on this thread and another where you've posted the same extraordinarily contrived explanation about inflation and product pricing etc.

Are you surprised that the question of brewers' and Pub Cos' price rises are conflated with the question of duty reductions? When I order a pint in my local the product doesn't come with a detailed statement describing the price it was this time last year, the amount it is increasing due to the brewer's supply price rises, the amount it's further increasing because the pub is tied, the amount it's increasing due to rises in the publican's overheads, less the penny or so it's reducing as a result of duty changes. I also note the price is not indexed-linked to the price of barley in Czechoslovakia, the exchange rate between the Euro and the US Dollar, or the average inflation rate of EU member states.

As a fairly uncomplicated soul, all I know is my pint is now £3.65 when it was £3.50 a year ago. Interesting, as the added-value 'ambience' is enhanced by the pub's TV where Osborne is telling me inflation is zero. Do I point out that particular contradiction to the licensee, or do I initiate a much wider debate by telling him the same pint is still 70p a pint at Tesco and is unchanged for the last 3 years?

I note how criticism of the price fixing within this industry is dismissed with a fairly predictable 'and what you gonna do about it' style of defence. It's perhaps an opportune moment to remind everyone that that is exactly what was faced by those who have just achieved such a magnificent victory for a better deal for publicans.

I suppose the alternative to protest is just to lie back, enjoy it all, and not to ask too many questions.

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Hogwash alert

Posted by Veritas,

Judging by NLs posts he must think he is dealing with hogs David.

How refreshing it was to see the small brewer on tv news yesterday confirming that all his main costs had decreased in the past twelve months. No bleating about wages from him, but brewing is hardly labour intensive is it?

Honesty is always refreshing, never more so than when set against the nonsense and squirming of apologists.

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David

Posted by Northern licencee,

Thanks for noting I find brewery price rises hard to understand though I don’t think a catch all measure such as RPI sheds much light on the issue. In my personal life I find my day to day expenses have gone down in the last 12 months. In my business life it is bit more nuanced I have recently renegotiated my gas prices from next month and got quite a decent reduction, rates were down because of the relief and getting a reduction at tribunal. Beer up, wages up, entertainment was up but I have cut back, will see what the effect on turnover is; overall a slight rise, hence my putting my prices up last month. One thing is for sure 0% nationally, globally doesn’t mean much to me or I suspect a brewer.

I am not sure what ridiculous suggestion you refer to, I don’t think I made any. I never suggested this was anything but a political gesture / posture as was the last government’s inflation busting rises. All actions by politicians are gestures / postures that’s their business. We as an electorate throw them out if they don’t make them so I am not sure what your point is. It’s a bit like criticising me for promoting beer sales.

If you believe there is a cartel you should take it up with the DOT. However as they have investigated the matter several times and found there wasn’t I don’t think you will get far.

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