Ahead of the changes taking effect in April, the British Beer and Pub Association (BBPA) revealed pubs will need to implement price hikes to maintain their “punishingly slim” profits in the face of increased business costs.
BBPA chief executive, Emma McClarkin said: “The cumulative impact of these taxes and regulations is now plain to see and it is highly unfortunate that the only way many pubs can remain viable is to pass on the array of upcoming costs to consumers.”
She emphasised: “No one wants to see the cost of an average pint increase by a further 21p and break the £5 average pint barrier that will be required for pubs to maintain their punishingly slim profit margins."
Unsustainable and chaotic
Independent analysis by Frontier Economics, commissioned by the BBPA, supported the prediction, noting the changes represent a net cost of approximately £650m for the beer and pub sector.
These changes include a reduction in business rates relief from 75% to 40%, increases in Employer National Insurance rates, a lower threshold for National Insurance payments, and significant rises in the National Minimum and Living Wage.
The BBPA also highlighted the “unsustainable and chaotic packaging reform (EPR)” as a significant burden.
Prior to the Budget announcements, the average price of a pint was £4.80. The new costs are expected to drive this up to £5.01.
While a 1p duty cut on draught products and lower utility costs offered some initial relief, the BBPA argues that the new policies will ultimately increase costs in 2025.
Cumulative impact
The BBPA urged the Government to review the “unfair EPR regime”, reform business rates, and phase in new employment costs to alleviate the pressure on pubs and keep the price of a pint affordable.
McClarkin stressed the urgency for Government intervention to “cap or reduce the costs-of-doing-business so we can keep pubs open, preserve their community value, and make sure the price of a pint remains affordable for all”.
Frontier Economics, associate director Tim Black acknowledged the resilience of the sector but warned: “More headwinds are coming. The sector is at the sharp end of a wave of policy changes that will push up costs – higher wages, increased National Insurance, reduced business rates relief, and new packaging rules."
“The cumulative impact will be significant. It’s vital that policymakers recognise these pressures and ensure the environment supports investment and growth”
