Insult to intelligence
The recent Budget announcements, revealed by Chancellor Rachel Reeves, on October 30 included reducing alcohol tax on draught products by 1.7% in cash terms. As well as increasing the value of draught relief duty differential from 9.2% to 13.9% for qualifying beer and cider products.
Government documents outlining the move to reduce draught prices, also claimed that to recognise the economic and cultural importance of British pubs, and commitment to supporting smaller brewers, the Government is cutting alcohol duty on draught products from February next year, reducing in by 1p per average strength pint.
Cheshire Cat Pubs and Inns operator Tim Bird shared his strategies for dealing with cost increases: “In terms of cost increases like business rates, employers national insurance and the [national] living wage increase, we have five months to plan our strategy, but sufficed to say on the one hand prices will need to increase, but more importantly we have to remain the very best at what we do and then we will enjoy the lion’s share of the business.
"Quality is remembered long after the price is forgotten! Value for money will still be our complete aim despite a need to charge a little more for things.”
Detailing the need to showcase new occasions and events throughout sites, Bird explained he hoped to generate more income streams as a result. He added: “This 1p off a pint is an insult to our intelligence.”
He continued: “We are optimistic about the future despite having been through so much. We will not let this Government or anyone else grind us down!”
Other key points detailed in the Budget included a rise in the rate of employer national insurance contributions, increasing from 13.8% to 15%, up 1.2 percentage points. Wage rates are also set to increase, specifically for those aged between 18 and 20.
Little choice
Philip Cutter, owner and operator of the Gardeners Arms/ Murderers in Norwich, shared his thoughts on the financial effects of the announcements and detailed his plans for the future: “Sadly the Budget really has not been kind to hospitality and it's very disappointing the new Chancellor has loaded many small businesses with increases, that will give us little choice but to pass on increases onto the public.”
He continued: “Sadly, wages will need to be cut, which will mean reduced hours for staff and price increases over the bar, in order to maintain profitability.” Emphasising specific price increases, he stated: “Some price increases have already been outlined to me, which show an increase of 37p on a 24 x 330ml case of bottle Budweiser. Other packaged beers, wines and spirits will also see a price hike – a 50 litre keg of Carling will see a decrease of just 37p.”
Cutter, similarly stressed that increases in national insurance and wages paired together with soaring business rates have, put a “significant pressure” on the business looking forward within the next twelve months and has, he stated: “curtailed ringfenced money for investment back into the business”
Cutter added: “My initial view is that the Budget will cost us in excess of £40,000… so we will see absolutely no benefit from the Chancellors ‘generosity.’ A spokesperson for the UK Spirits Alliance, stated she believed the hike in spirits duty would hammer trade, and impact customer engagement. She added “pubs are more than pints”
Owner of the Unruly Pig in Bromeswell, Suffolk Brendan Padfield also shared his plans to evolve within the current climate: “We are yet again reviewing all supplier’s T &C’s , introducing a recruitment freeze and applying an even sharper eye to rotas.” When addressing new, updated ways of dealing with the ramifications of the budget, he continued: “There is no magic wand” he added, “margins have already been cut to the bone.”
Also touching on managing volumes of staff, he continued: “There is no doubt that staffing ratios will need to be cut so inevitably, that this will adversely impact upon the service we can deliver. This is in the context that post-Covid customer service expectations are at all time high.”
