Well, Budget Day has come and gone, and there has been the usual phenomenon of various unpalatable measures being trailed in advance, and a sigh of relief being breathed when some of them at least are not implemented. There is also usually at least one surprise pulled from the Chancellor’s hat, and this year it was the decision to reduce the rate of duty on draught beer and cider by 1.7%, equating to about 1p on the sale price. The duty on packaged beer and all other alcoholic drinks will increase in line with RPI.
This comes across as a pointless empty gesture that will achieve nothing. Even if pubs see a small reduction in price from their suppliers, in pretty much all cases they will take the entirely understandable decision to slightly widen their margins rather than passing it on to the customer. Virtually no drinkers will see any reduction in the price of a pint over the bar. This was unsurprisingly met with widespread derision, and realistically the optics would have been much better if the rate had simply been frozen. Yet they have the brass neck to shout it from the rooftops as though it is a significant benefit.
Any effect of this will be vastly outweighted by a whole raft of other factors that will increase the costs incurred by pubs. The first is that the 75% discount on business rates that they have enjoyed since the period of lockdowns will be reduced to 40% from April 2025, pending a comprehensive revamp of the system in 2026. This will more than double a pub’s business rates bill. The Morning Advertiser reports that the rates bill for the average pub will increase from £3,938 to £9,451.
The rate of Employer’s National Insurance contributions will be increased from 13.8% to 15%, and the minimum threshold on which they are charged will be reduced from £9,100 to £5,000. This will greatly increase the cost of employing staff, and will hit hospitality, where there are many low-paid and part-time workers, particularly hard. For the very smallest businesses, there will be some relief from raising the exempt band, but the vast majority will still suffer.
Meanwhile, the main adult rate of the National Living Wage is being increased by 6.7%, over three times the rate of inflation, bringing it to £12.21 an hour, while the 18-21 rate will be increased by no less than 11.6% to £10 an hour. Again this will have a particularly severe impact on hospitality due to the profile of their workforce. Some idiot on Twitter opined “why shouldn’t workers be paid a fair wage?”, but you can’t pluck a figure out of the air without any regard to employers’ ability to actually pay it.
On top of this, the government are planning to implement changes in employment law to give workers full rights from Day 1, which will make it much more difficult to dismiss unsatisfactory employees, and make businesses much more reluctant to take anyone on without a proven track record.
One publican reckoned that, to recoup the cost of all these changes, she would need to increase the typical price of a pint by 30p. But then you run into the problem of your customers, who are experiencing similar financial pressures, being unable or unwilling to pay that, resulting in a vicious circle of diminishing returns.
The inevitable result will be that, after the Christmas and New Year period, we will see a rising tide of pub closures, and many of those still standing will be reducing staffing levels, opening hours and food service times. But the joyless wowsers, never missing an opportunity to kick a man when he is down, will still no doubt go ahead with their Dry January campaign.
And, while I have done my best to avoid making wider political points that go beyond the drinks and hospitality industry, it’s hard to escape the conclusion that we are being consigned to four and a half years of Britain being a high tax, low growth and low enterprise economy.
I totally agree with your conclusions Curmudgeon. The smoking ban, and now all this, in my opinion make Labour the Puritan Party.
ReplyDeleteLolz at all the beer geeks and beards that thought Labour was going to be better. That Simpsons Ha Ha meme.
ReplyDeleteYou'll be lucky to get thru 5 years with a single pub still standing.
As for growth, Energy is the input to every agricultural commodity, manufactured good or service. The highest energy prices in Europe equals the poorest country in Europe. Not a chance.
But heh ho, in 5 years, Nige seems to like pubs.
I remember Curty writing an article before the election about how pubs could look forward to a more stable financial environment under Labour. Didn't bookmark it, unfortunately.
Deletetbh, Mudge, after the miserable failure of the last lot, I was in the group that thought Keir couldn't possibly be worse. Oh dear. 1 term this lot. There's a more than even chance Nige will have enough seats to wag the dog.
DeleteFour and a half years? I guess you've never lived behind the iron curtain if you think these communist totalitarian governments can be voted out so quickly.
ReplyDeleteA pub employs someone, bar staff, kitchen, cleaner, for 20 hours per week on current minimum wage. 52 weeks wages are £11,900, Employers NIC £386, total £12,285. Increase from 13.8% to 15% adds £33.50. Lowering the threshold alone adds £565. Combined it adds £650 (add 1.2% on threshold decrease).
ReplyDeleteNew minimum wage increases wages by £800 but NICs are now £1155, £769 more than currently and nearly as much as the wage increase. A total cost increase £1570 per employee.
Rather a lot to absorb. E&OE
Because of that 'Cheaper' pints graphic, pubs are also going to have to suffer a raft of idiot customers asking where their 1p discount is, every time they buy a beer
ReplyDeleteI liked the idea from one licensee that I saw on Twitter where, when the Tories did something similar a few years ago, he put a bowl of 1p coins on the bar and invited customers to take one every time they bought a pint. None took him up on that.
DeleteHa! Yes, that's a good one
DeleteAt the risk of being banned for speaking politics: there is something self evidently wrong with an economic system that can only remain viable by paying its employers less than a living wage.
ReplyDeleteIt becomes even more ludicrous when the state has to make up that wage by various forms of welfare payment. Welfare payments funded by taxation.
In the words of the great Thomas Sowell, “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”
DeleteI could go on, but I think a more in-depth discussion of this subject is off-topic for this blog, really.
And the first duty of politicians is to ensure that those scarcities are equitably distributed amongst the population. Some thing in which politicians of all colours have singularly failed to achieve since 1978
DeleteI’d agree that decent Christian morality ought to create a consensus that a days pay should be good enough to live off with dignity. Further you’d expect an advanced economy with greater than subsistence levels of productivity to be able to deliver this without much in the way of debate. We may be declining to 3rd world status under Keir but we are not there yet.
DeleteWhat I will say about low pay and minimum wage. Stats show that most people on it today will not be on it within 10 years. For most it is a start, a springboard to greater opportunity. It is not a life long condition. For the young, wages are not being lived off, parents are, and wages provide pocket money and a learning introduction into working life. Lower minimum wage has been an acknowledgement of their lower productivity and an encouragement to employers to give them a chance and a start.
I’m all in favour of greater dignity in work and it is something that has declined and we should hope a labour government improve. Benefiting those in the labour market at the cost of those trying to enter it is a false economy. The young, jailbirds, mothers returning after a lengthy absence, are all people that deserve a chance and will not be as appealing as established participants. No harm in a cheap introductory offer to see they get that chance.
As another great man, Winston Churchill, said: “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy; its inherent virtue is the equal sharing of misery.”
DeleteAs another great man, Clement Attlee said "Winston Churchill - fifty per cent genius, fifty per cent bloody fool." Your quote is from the bloddy fool.
DeleteMore apposite Attlee also said "No social system will bring us happiness, health and prosperity unless it is inspired by something greater than materialism"
That will never be socialism. Socialists steal other peoples money and waste it.
Deletedcbwhaley:"And the first duty of politicians is to ensure that those scarcities are equitably distributed amongst the population"
ReplyDeleteThis was a joke right?
The off-topic political sparring has now gone far enough.
ReplyDeleteOne crumb of comfort is that the proposal to ban smoking in pub gardens has been dropped.
ReplyDeleteNow the Donald is prez again, woke is dead.
ReplyDeleteNige will be the next PM and pubs will be great again !
I thought tonight the most wonderful sound in the world is noise of an ice-cold
ReplyDeletecan of Corona bring cracked open.
But then I remembered - the old boy behind the bar knowing I was underage but still asking " what's your poison son?"
He gave me five halves then told me to fuck off.
Funny the things that come back to you late at night.
Our last night of a month-long trip across the Atlantic and through the Caribbean to St Kitts,St Lucia,Antigua, Barbados,Port of Spain and finally St Maarten where we have sojourned for the last 12 days.
ReplyDeleteLargely uneventful except for nearly choking to death on a 3" fishbone and last night having to dive out of the way of a speeding car that has left me with a dodgy foot that will need wheelchair support at the airports going back to Blighty. Hopefully not too serious as I'm off to New Zealand for the cricket next week.
Mrs PPT and I had a tally up today.
We reckon we've drunk three litres of gin, 40-50 beers, a gallon of margaritas,a dozen bottles of Chardonnay and assorted bits and bobs in beach bars where the memory is hazy.
I've smoked 20 Cuban cigars and a fistful of Jamaican weed.
But - and this is important because Mudgie doesn't approve of my rambles and it's good to keep it beer based - the absolute stand-out drink has been the Left Hand Brewing Company's nitro milk stout. A sublime 6% stunner which in our favourite bar's happy hour was $5 a pint.Just a gorgeous drink served in an ice-cold glass.
I flopped six of them tonight.
We did the trip to be in the same time zone as the US election and watching the Democrats lose their minds and Republicans enjoying watching it Brexit-stylee has been hugely entertaining.
A good trip.