The hospitality sector needs to sell almost one million extra pints every hour in order to cope with a £1bn cost surge thanks to Chancellor Rachel Reeves’ tax hikes, the chief executive of BrewDog has warned.
James Taylor, who took on the job earlier this year, said Reeves needs to take ‘meaningful action’ because of the rise in energy bills, labour costs and the Chancellor’s tax hikes.
The Scotland-based company wants to see reforms to business rates, relief on beer duty in the Autumn Budget next week as well as ‘a review of the cumulative cost burden that is threatening the viability of thousands of UK pubs and breweries’.
BrewDog is also calling on Reeves to consider a temporary VAT relief for hospitality companies ‘to protect jobs and sustain local economies’.
The business said the Autumn Budget ‘represents a critical moment for the future of Britain’s brewing and hospitality industries’.
BrewDog said, according to its own analysis, increases to the National Living Wage and employer National Insurance contributions have ‘significantly raised staffing costs across the sector’.
BrewDog boss hopes Reeves doesn’t ‘clobber’ hospitality industry in Budget
Taylor said: “In the past year alone, energy and utilities, wages, National Insurance contributions, raw materials, packaging, and regulatory costs have all moved in the wrong direction.
“We estimate that, taken together, these cost increases have added more than £1bn to the sector’s collective bill.
“The tax rises that came into effect in April, notably the increase in duty on non-draught beer and the scaling back of business rates relief for pubs, have made a tough trading environment even tougher.
“If the Chancellor chooses to clobber the sector again in this Budget, many independent brewers and pub operators will simply not be able to withstand the pressure.
“Other markets have already recognised the scale of the challenge, both Germany and Ireland have announced or proposed VAT reductions for hospitality – with Ireland cutting VAT to help protect jobs and support recovery.
“The UK government should follow their lead. Britain’s brewing heritage is something to be proud of.
“With the right policy environment, this sector can be a powerhouse for jobs, growth, and creativity.”
A spokesperson for the government yesterday told City AM: “We’re cutting the cost of licensing, lowering business rates and helping more hospitality businesses offer pavement drinks and al fresco dining, on top of cutting alcohol duty on draught pints and capping Corporation Tax.”