Drinkers will not feel the benefit of the Chancellor’s tax cut on a pint of beer because of the impact of inflation on prices, pub bosses have warned.
Industry chiefs warned that spiralling inflation was poised to cancel out any benefit from a “draught relief” which will apply to 40-litre kegs of beer and cider.
Jonathan Neame, chief executive of Shepherd Neame, which runs 300 pubs across London and the South East, told the BBC’s Today programme.
“We will pass on the duty cut at a wholesale, but in all honesty, pubs are facing between 25p to 30p per pint inflation and all this will do is take the top off that.”
Pubs and restaurants are experiencing inflation of around 14pc, fuelled by an increase in the minimum wage and rising food prices.
Mr Neame said: “While I’d love to see the price of beer come down, it’s very hard to see that, because a lot of inflation is still coming down the track in terms of energy and food.”
Rishi Sunak overhauled alcohol taxes in the Budget – higher taxes will be levied on stronger drinks such as fortified wines, high strength ciders and some stronger red wines.
Drinkers will pay less for rosé, fruit ciders, liqueurs, and lower strength beers and wines under the changes.
Clive Watson, chairman of City Pub Group, said the industry was battling a host of pressures, including delivery shortages and soaring construction costs.
He said: “If the price of premium lager is £5, then 5pc inflation is a 25p increase. That price increase will barely cover the extra costs.”
Mr Watson said the Chancellor should have set “a lower VAT on essential items and a higher VAT rate on luxury goods”.
He said: “This would bring down the cost of living and reduce money spent on luxury imports”.
It comes amid concerns that any relief for pub groups will take some time to filter through, with the Government consulting on the draught beer and cider duty changes. They would be expected to take effect in February 2023.
Steven Alton, chief executive of the British Institute of Innkeeping, warned that higher prices would hit its members as they enter the quieter winter months.
He said: “After 18 months of disruption and closures, they simply do not have the resilience built into their businesses that they would normally rely on at this time of year.”
He said all its members were attempting to keep cost increases at a minimum.
“The simple truth however, is that every single area within their businesses has seen a sharp increase in cost over the past few months.”
Pub groups have been urging for the Government to call off a planned increase in VAT next spring, which will see a return to the standard rate of 20pc. VAT was lowered at the start of the pandemic to 5pc, and was gradually increased to 12.5pc from this month.
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