The real reason the price of a pint could increase despite draught duty cut

The price of a pint of beer could actually increase despite Rachel Reeves announcing a cut to draught duty in last week’s Autumn Budget. 

Industry experts have warned that the Chancellor’s cut by 1.7% will not translate to a cheaper pint and slammed her decision to increase employer’s National Insurance Contributions (NICs) and the National Living Wage.

Ms Reeves, however, claimed it would lead to a “penny off pints at the pubs” – an assertion that has now been disputed. Tim Dewey, chief executive of the Landlord brewer, was certain the draught duty cut is “irrelevant” to the price of a pint.

He told The Telegraph: “There’s absolutely no question that the cut in beer duty is really an irrelevance relative to the price pressure [Reeves has] put into the pub industry.

“Duty is what we term a pass-through cost. If duty goes up, our price goes up by the amount of duty. If duty goes down, our price goes down by the amount of duty.

“So we get absolutely no savings as a brewer from the duty change. But we’ve got all the costs of the NI increase and also the living wage increase.”

Ms Reeves announced a rise in employer’s NICs from 13.8% to 15% and increased the National Living Wage from £11.44 to £12.21. Dewey claimed these costs would force pubs to raise prices, negating any benefits from the draught duty cut.

Simon Webster, co-founder and chief executive of Derbyshire’s Thornbridge Brewery, emphasised Dewey’s point, calling a saving of a mere 1p “ludicrous”. 

He told the outlet: “It’s the latest blow for the industry to be honest – hospitality has really been hit with these new rises. We will have no choice but to put the price of a pint up in the pubs and also out of the brewery.”

Another industry leader to slam Reeves’ measure was Jack Hobday, co-founder of craft brewer Anspach & Hobday, accusing Labour of going against the UK’s “national prosperity” with the latest Budget.

He added: “In the long run, this Government is choosing to make the UK labour market less competitive by taxing a company’s ability to hire working people.

“I wish our politicians properly debated policy and macroeconomic models thoroughly and publicly before they announced them.”