by Benjamin, Byung Hoon, Ko, political commentator
When I first moved to London, there was one thing that shocked me more than anything… the price of a pint. I had to pay nearly £8 for a Guinness. Even in my local pub outside of London, the prices have gone up noticeably during the last three years. A pint of real ale went up from £3.80, to £4.40, now to £4.70. That is nearly a quarter increase, above inflation. The reason for the rising cost is simple. Tax. If we assume that a pint is £5.50, over £1.40 goes straight to the government, before the publican or the brewer get a penny.
In the UK, beer duty is £0.53 per pint. This is third highest in Europe, and ten times more than Germany (£0.04) or Spain (£0.03). Further, there is VAT, 20 per cent on top of the price and the beer duty, acting as a tax on top of a tax. Then there are business rates (disproportionately high for pubs), licensing, regulatory compliance and rising wages. All of these government-led initiatives are responsible for increasing the price of a pint at your local. To put that into perspective, a £5.50 will have £0.54 of beer duty and £0.92 of VAT, which translates to a quarter of the cost of the pint being tax. That’s before you apportion business rates!
Unfortunately, there is even further damage: the significant human cost to the rising price of pints. In 2023, 509 pubs in total closed in England and Wales. If we say that a pub hires ten staff, a significant underestimate of the staff size of most pubs, that is more than 5,000 jobs lost in a year. In fact, pubs and breweries support more than 900,000 jobs in the UK. Closures mean job losses and hurt breweries and suppliers. This further extends to trade with local farmers, food producers, etc.
The impact is clearly visible in rural and small-town communities where the pub is often the last remaining social hub. It is a loss of local history and cultural heritage, as centuries-old pubs are gone forever. Some breweries are also significantly impacted by local pubs closing. In Northwest England alone, 14 breweries shut as a result of pubs closing. This is also damaging to the local culture and economy, as many small breweries, reflect the local culture and source local ingredients.
High beer tax hurts both pubs and the government; a lose-lose. First, high pint prices drive consumers to cheap supermarket alcohol. With the potential knock-on effect of significantly increasing the number of those who abuse alcohol. This makes it easier to drink large amounts unsupervised, unlike in pubs, where when you’ve had one too many, others or staff can intervene. Second, reduced pub visits would also mean less VAT revenue for the Treasury. High beer tax actually costs the Treasury. Pub closures also mean a loss of business rates and income tax from staff, which is also a further loss for a government which is unable to turn the spending tap off.
There is a strong case here for a tax cut on beer. Cutting beer duty, even by 10p, could reduce the price of a pint by 50-70p in some areas of the country. A 5p duty cut could boost the sector by more than £60 million in the first year. In addition to the immediate benefits of lower pint prices, more affordable pints would naturally lead to fuller pubs, which creates more job opportunities and stronger local economies. This worked before with George Osborne’s 2013 beer duty freeze. There was a noticeable impact on the market, as it significantly slowed the rate of pub closures. With British beer being a unique asset to Britain, lower duty would also make the UK’s craft beer / real ales more competitive in export markets and pubs abroad.
Britain’s beer drinkers are paying over the odds because the Treasury is hooked on the pipe dream of higher beer duty meaning higher duty revenue. However, the reality is the complete opposite. The government’s unreasonably high beer duty only results in the loss of pubs, jobs, and communities, for short-term tax grabs. It is time for the government to see some sense, think long term and cut beer duty. The message to the Treasury is simple: take the froth out of our finances and put it back in our pints.