Cost of doing business 'completely out of control' for pubs as alcohol duty freeze reversed

Yesterday, the newly-appointed Chancellor of the Exchequer, Jeremy Hunt, confirmed that the freeze would be reversed as a part of a complete rowing back of the Government's so-called 'Growth Plan' announced less than a month​​ ago by the former Chancellor, Kwasi Kwarteng, who was ousted from the role last week. 

According to the British Beer and Pub Association (BBPA), the freeze would have delivered a £300m saving to businesses, with chief executive Emma McClarkin describing it as a huge blow to brewers and pubs.

“The freeze would have delivered a £300m saving to our industry at a time when we desperately need any relief we can get, to help to keep a lid on spiralling costs and keep the price of pint affordable for pub goers this winter,” she said.

“The cost of doing business is completely out of control for pubs and brewers and the failure to act today to reduce pressures on businesses will hit them extremely hard. Our sector needs stability to plan and be able to keep serving communities at a reasonable price, but instead has been subject to ongoing uncertainty for too long.

“Waiting until a February budget to ease these pressures will be too late, we need the Chancellor to act before Winter really starts to bite for our brewers, pubs and the customers and we lose them forever in communities across the UK.”

As part of his dismantling of the Government's economic agenda, Hunt also announced that support for consumers on energy bills would be shortened from the two years previously announced, to April 2023.

Support for business, which will see wholesale prices to be fixed for all non-domestic customers at an expected rate of £211 per MWh for electricity and £75 per MWh for gas until for an initial six month period​​, will remain in place. However, it is not known if the Government now plans to further support firms classed as 'vulnerable', including those in hospitality, as had been previously suggested​​.

UKHospitality CEO Kate Nicholls said that given the economic volatility over the past few weeks, the trade body understood the need for the Chancellor to announce these measures.

“Prior to the energy crisis, which is proving to be so devastating, the sector was forecast to grow by 3% and there is still a real desire from our dynamic hospitality businesses to return to those levels of growth,” she commented.

“However, the hospitality sector is so exposed to this crisis and has been devastated by it, which is why the energy support provided by the government to help weather this storm, remains critically important and will help protect a vital industry. It’s essential that the government continues to work closely with the sector as part of its review into support post-April 2023.”

The Night Time Industries Association, which represents some 1,400 independent bars, clubs and live music venues across the UK, was more critical in its reaction.

“The statement from the new Chancellor, may calm the markets, but has critically compromised thousands of businesses and workers across our sector,” CEO Michael Kill said.

“This will create further uncertainty around energy costs after April 2023 and will see alcohol duty add to an already untenable operating costs.

“Our industry is now facing one of the toughest winters in history.”

Hunt's latest announcement comes after it was confirmed last week that corporation tax will rise to 25% next year,​​ rather than remain frozen at 19% as Kwarteng had planned.