Average price for lager has risen by 80p a pint faster than inflation

12 September 2011

Sky high rents have priced local pubs out of the market with closures particularly in working class areas in Britain as those on low incomes lost pubs that survived the blitz and the great recession in the 1930

Lager is on average 80p per pint higher and ale is 65p per pint higher in 2011 in UK pubs than justified by inflation and like for like changes in taxes since 1987 a new study shows. Sky high rents charged by landlords are responsible says GMB the union for tied pub tenants.

According to RPI data the average price for a pint of lager in 2011 is £3.09. This is 91p higher than the £2.18 it would have been now had it moved in line with inflation. RPI data shows that the average price for a pint of ale in 2011 is £2.70. This is 75p higher than the £1.95 it would have been now had it moved in line with inflation.

The figures for each year since 1987 are set out in the Table below. See note 1 for details on the sources of figures in a new analysis of average drink prices by GMB. The study looks at official RPI price data for lager and beer for each year since 1987.

Retail prices in pubs are also subject to changes in VAT and excise duty as well as general inflation. There have been two increases in the rate of VAT since 1987 from 15% to 20%. Since 1987 excise duty on standard lager and ale has increased in real terms by 2p per pint faster than inflation. The additional taxes per pint, over and above keeping pace with the rate of inflation for both retail prices and taxes, are 11p per pint for lager and 10p per pint of ale.

The average rise in prices faster than inflation not attributed to like for like changes in taxes are 80p per pint for lager and 65p for ale in 2011.The figure is higher for some pub chains.

	RPI: Ave price - Draught lager, per pint in pence	Price per pint in line with inflation in pence	Difference in pence above inflation		RPI: Ave price - Draught bitter, per pint in pence	Price per pint in line with inflation in pence	Difference in pence above inflation
1987	93				83
1988	99	99.42	-0.42		88	88.73	-0.73
1989	108	107.14	0.86		96	95.62	0.38
1990	122	117.27	4.73		109	104.66	4.34
1991	137	124.16	12.85		124	110.81	13.2
1992	146	128.81	17.2		131	114.96	16.05
1993	153	130.85	22.15		136	116.78	19.22
1994	158	134.01	23.99		141	119.6	21.4
1995	166	138.66	27.34		147	123.75	23.25
1996	173	142.01	30.99		154	126.74	27.26
1997	181	146.48	34.53		163	130.73	32.28
1998	189	151.5	37.5		169	135.21	33.79
1999	194	153.82	40.18		173	137.28	35.72
2000	200	158.38	41.62		178	141.35	36.65
2001	203	161.17	41.83		181	143.84	37.16
2002	209	163.87	45.13		181	146.25	34.75
2003	226	168.61	57.39		194	150.48	43.52
2004	233	173.63	59.37		202	154.96	47.04
2005	241	178.56	62.44		211	159.36	51.64
2006	251	184.23	66.77		220	164.42	55.58
2007	262	192.14	69.86		230	171.48	58.52
2008	274	199.76	74.24		239	178.28	60.72
2009	280	198.74	81.26		248	177.37	70.63
2010	294	207.95	86.05		258	185.59	72.41
2011Q1	302	214.74	87.26		265	191.65	73.35
2011JAN	304	212.97	91.03		267	190.07	76.93
2011FEB	301	215.11	85.89		264	191.98	72.02
2011MAR	302	216.23	85.78		264	192.98	71.03
2011Q2	308	218.46	89.54		269	194.97	74.03
2011APR	307	217.99	89.01		269	194.55	74.45
2011MAY	308	218.74	89.26		270	195.22	74.78
2011JUN	308	218.74	89.26		269	195.22	73.78
2011JUL	309	218.27	90.73		270	194.8	75.2

Paul Maloney GMB National Officer for tied pub tenants said:

“The Beer Orders were introduced in 1989. The aim was to foster competition to increase consumer choice and bring down prices.

The opposite of this aim is what has been achieved. Prices are between 80p and £1 per pint higher than justified by inflation and changes in taxes in pubs where property companies replaced brewers as owners. Across the board the average price for a pint of lager in Britain has risen by 80p higher than inflation and changes in taxes.

Local pubs owned by property companies have been priced out of the market and widespread pub closures have resulted particularly in working class areas in Britain. Low paid workers and those on fixed incomes like pensioners have lost local pubs that survived the blitz and the great recession in the 1930.

Between 1991 and 2000 the average price of a pint of lager increased by 46% compared to a 27% rise in inflation. Between 2000 and 2010 the average price of a pint of lager increased by 47% compared to a 31% increase in inflation.

The financial engineering that led to local pubs being owned by bondholders based in offshore tax havens charging sky high rents to tied tenants was organized by the City. It mirrors what happened at Southern Cross care homes. It is a myth that the City promotes competition and free markets. The City, left to itself, tends towards monopoly pricing and less choice unless Government for citizens is vigilant on their behalf. They organized the ruinous sky high rents. BBPA has been not succeeded in shifting the blame from monopoly pricing to taxes.

The interests of the tied tenants as directed workers currently appear too disparate for them to unite to take lawful action to stop the decline in the pub trade as the ongoing recession in consumer spending makes things worse for them. Tenants fear the power of the pubcos. Tenants are also subject to a diet of partisan and biased views from opinion formers in the industry. At local level sharing of information is the only way tenants can support each other.

Government will have to be forced to take action on the disaster for communities and tied tenant that followed the Beer Orders. Jobs are being lost daily. Political action is needed to introduce a free market in the pub trade. That was the intention of the Beer Orders. GMB with our tied tenant members will campaign at constituency level to secure support for this policy.”

Notes:

Draught lager and draught bitter prices and the RPI figures are the seasonally adjusted RPI figures from Office for National Statistics, MM23 Consumer Price Indices available at:
http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/july-2011/tsd-june-2011.html

The full figures and methodology can be found here:
http://www.gmb.org.uk/newsroom/latest_news/lager_80p_a_pint_too_high.aspx

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