Highlights
- Alcohol duty to rise by 3.66 per cent in February, adding roughly 2 pence to price of a pint.
- Increase based on discredited RPI measure, making it 50 per cent higher than if CPI used.
- Comes amid business rates hike and rising employment costs, threatening pub closures.
British pubs face a fresh financial blow next month as chancellor Rachel Reeves introduces a £400 m annual alcohol duty raid, increasing taxes on pints, spirits and wine by 3.66 per cent from February.
The inflation-busting rise will add approximately 2 pence to the cost of a pint in pubs, though industry leaders warn this seemingly small increase could prove devastating when combined with other mounting costs.
Allen Simpson, chief executive of UKHospitality, warned, "This will be the last straw for some pubs."
The increase has sparked particular controversy as it's calculated using the retail price index (RPI), an outdated measure of inflation the Government itself acknowledges has "flaws" and hasn't been an official statistic for over a decade.
Using the consumer price index (CPI), the official inflation measure, would result in an increase 50 per cent smaller.
Mounting pressures on publicans
The alcohol duty rise compounds existing challenges facing the hospitality sector.
Pubs are already struggling with increased employers' National Insurance contributions, successive minimum wage increases, and a looming business rates hike in April that could double bills in some cases.
Emma McClarkin, chief executive of the British Beer and Pub Association, told The Telegraph "Pubs are already grappling with huge rates and taxes, and they just don't have room to absorb fresh costs. Fresh rises could lead to the price of a pint going up."
Clive Watson, chairman of Inda Pubs, described the situation as "throttling" the industry, noted "Staff should be seen as an important part of the business, but because of employment taxes and above-inflation rises on living wage, operators are constantly looking at trying to reduce hours."
The Office for Budget Responsibility forecasts alcohol duty will generate £12.3 bn in the coming financial year. British drinkers already pay around 54 pence duty per pint, the third-highest rate in Europe behind Finland and Ireland.
A Treasury spokesman defended the changes, stating they "balance the important contribution of producers, pubs and hospitality with funding vital public services" while highlighting a £4.3 bn business rates support package.
