The £5.34 Pint

A pint of draught beer now costs about £5.34 in a British pub, and £6.55 in London.^[1] Each time a figure like that comes out, the same argument follows: duty is too high, brewers are pushing prices up, the pub is overcharging. I’m not sure any of those is quite right. Pull the price apart line by line and the beer is one of the smaller items in it. Much of what you pay is shaped upstream of the pump, by decisions taken department by department across Whitehall, and no department holds the combined view.

I wrote recently that Britain has a cost-of-policy problem: government makes decisions vertically, inside departments, and businesses absorb them horizontally, all at once. The pub is about the cleanest case study I can find. It has one set of accounts, a fixed site, a shrinking market and at least five parts of the state writing lines onto its P&L. Most of those lines can be defended on their own. Read together, they form a pattern that no single department answers for and that government, as far as I can tell, does not measure.

Start with the pint itself. On an ordinary four per cent draught beer, alcohol duty comes to about 44p at the current draught rate,^[2] and VAT takes another 89p of the £5.34. Then there is the beer. The remainder funds the expensive part of the operation: somebody behind the bar, a building kept open, a cooled cellar and a heated room, rates, electricity, insurance, waste collection, licensing and everything else that has to be in place before you walk in at 8pm and ask for a pint.

Most of your £5.34, then, pays for an evening’s access to a staffed, heated, licensed building.

That building runs on one P&L, while the policies landing on it come from half a dozen directions on half a dozen timetables.

Fixed costs, falling volume

A pub commits most of its costs before it sells a single pint. The rates bill is the same on a wet Tuesday as on a Saturday. The building still needs heating and insuring, the cellar still needs cooling, and somebody still has to stand behind the bar. At 8.15pm on a quiet night, you cannot go back and decide not to have opened for the previous three hours. The one number that can fall quickly is the number of pints you sell.

Britain had around 60,800 pubs in 2000 and 44,650 by 2025,^[3] roughly one in four lost over a quarter of a century. Every pub is trading inside that decline.

Take a pub that used to sell 120,000 pints a year and now sells 90,000. Its building costs have not fallen by a quarter. The same overheads now sit on 90,000 pints instead of 120,000, so the fixed cost carried by each pint rises by a third. If the operator raises prices to recover it, a few more regulars stay at home, and next year’s overheads land on fewer pints again.

A low-volume pub with a heavy fixed-cost base has very little tolerance for a run of individually modest increases. Four or five reasonable decisions, taken separately and sequenced by accident, can close it as surely as one bad one.

Support in one column, cost in the other

Government knows the sector is struggling, and to its credit it keeps trying to help. In January the Treasury announced another package. Eligible pubs and live music venues get 15% off their new business rates bills for 2026/27, followed by a two-year real-terms freeze. The Treasury says the average pub saves a further £1,650 this year and around three quarters will see their bills fall or stay flat.^[4] A £10m fund for hospitality runs alongside it over three years. Both measures help, and I would rather have them than not.

Look at the order things arrived in, though. By the BBPA’s estimate, measures in the November 2025 Budget added £322m of employment and rates costs to pubs and brewers.^[5] The 15% relief came afterwards and the BBPA’s figure excludes it, so you cannot subtract one from the other and call the result a net position.

That missing subtraction is my real complaint. Government can tell you to the pound what its latest support measure gives back. I have looked for the matching figure, the total that government has added to the same representative pub over the same period, and I cannot find one published. The support gets costed and announced. The costs sit in separate departmental impact assessments, each drawn around its own policy boundary, and nobody reconciles them. One department can announce help without anyone checking it against what another has added.

That gap is what I mean by policy incoherence. The state can observe each policy in isolation and has almost no view of what they do in combination to the business receiving them. The pub operator has the opposite problem: no say over any single policy, and sole responsibility for the combined bill.

Follow the same P&L

Labour comes first, because it is one of the largest costs a pub can adjust. In April 2025 the employer National Insurance rate rose from 13.8% to 15%. For a business running on part-time and lower-paid staff, the threshold mattered at least as much as the rate. It dropped from £9,100 to £5,000.^[6] UKHospitality estimated that the change pulled around 774,000 hospitality workers into scope for the first time, at a cost to the sector approaching £1bn.^[7]

A year later the wage floor moved again. This April the National Living Wage rose to £12.71 and the rate for 18 to 20 year olds went up 8.5% to £10.85.^[8] Alongside the National Insurance change, the Treasury raised the Employment Allowance, which offsets part of the cost for eligible smaller employers.^[6]

Each of these has a sound argument behind it. Higher wages have an obvious objective, the Treasury needs revenue and the Employment Allowance recognises the pressure on small employers. The trouble is how they stack. Decisions taken in different fiscal years, by different parts of government, all land on one question the pub operator faces every week: do I put another person behind the bar on Saturday night, and what will that shift cost me now?

If the shift costs more than last year, the options are dull and predictable. Put the price up, accept a thinner margin, give existing staff longer hours, or decide the extra person no longer pays their way. That sits awkwardly with ministers who also want more young people in work, at a time when the gap between younger and older workers’ pay is being deliberately narrowed. Narrowing it may be the right call on pay. It still changes the economics of the marginal first job, and somebody in government ought to own that dependency.

VAT works on the other side of the till, on what the customer pays, but it comes out of the same margin. Hospitality has lobbied for a lower rate for years. The UK charges the standard 20%. The Treasury rejected a cut to 10% and put the cost at around £11bn a year.^[9] That is a serious sum, and I accept it would have to come from somewhere.

This summer the same Treasury cut VAT from 20% to 5% on children’s meals and eligible family leisure activities.^[10] A temporary, targeted cut costs far less than a permanent £11bn one, so the two positions are fiscally consistent. The summer cut still shows government is prepared to use VAT selectively to change the economics of particular purchases. The wet-led local, which makes most of its money from drink, gets very little from it while carrying the employment and fixed-cost pressure above.

Further down the accounts sits packaging. Extended Producer Responsibility makes producers pay towards the cost of dealing with the packaging they put on the market. For glass, the government’s 2025/26 base fee is £192 per tonne.^[11] The aim is sensible enough. Pubs, though, already pay commercial waste contractors to collect the bottles their customers empty on the premises. The BBPA puts the resulting double charge at around £50m a year.^[12] That is an industry figure, and I would like to see government test it, but the question behind it is fair.

I doubt anyone set out to charge twice. More likely, the people designing packaging policy drew their boundary around the producer, the people running commercial waste drew theirs around the premises, and the pub ended up at the integration point between the two. The join between them belongs to no one.

Put the dates side by side and you can see the sequencing. Employer National Insurance rose in April 2025 and packaging fees for 2025/26 followed. The November 2025 Budget added further employment and rates costs. The rates relief was announced in January and took effect in April. The same month the wage floor moved again, and the VAT cut that largely bypassed wet-led pubs came in the summer. Those decisions came from separate fiscal events, a Defra programme and a Low Pay Commission cycle, each with its own timetable and impact assessment. I can find no sign that anyone sequenced them against each other.

One P&L, many departments

Government is organised by department. The pub operator gets one P&L.

The Treasury wants revenue and wants to support hospitality, while councils need a workable rates base. Defra wants packaging recovered. Ministers want pay to rise at the bottom of the labour market, and public health officials have sound reasons to want harmful drinking reduced. I would defend most of those objectives myself.

The incoherence comes from treating success inside each silo as success overall. A policy can hit its departmental target and still make the wider system worse once it interacts with everything around it, and the department that owns the target has no reason to look. Its incentives stop at its own boundary. The pub operator meets the combined effect on a Tuesday afternoon, logging into the business bank account.

The sector is already adjusting. The BBPA counted 161 pub closures across Britain in the first three months of 2026, 26% more than a year earlier, taking more than 2,400 jobs with them.^[5] Government did not cause all of those. Drinking habits have changed, younger people socialise differently, some sites are worth more as flats and some pubs are badly run. A shrinking market leaves less margin to absorb policy mistakes, which raises the cost of getting the sequencing wrong.

The same costs also fall unevenly. A high-volume city pub spreads its fixed costs across far more transactions than a community pub selling 60,000 to 80,000 pints a year, and the supermarket selling the same beer carries none of the cost of keeping a staffed public room open. If the licensed venue picks up costs faster than the shelf, some drinking moves from one to the other whether anyone intended it. Departmental impact assessments are least equipped to catch second-order effects like this, because they only show up once you model the policies together.

Put it all on one piece of paper

Before government announces the next package to save the British pub, it should run one deliberately boring test. Pick a real wet-led community pub instead of a model of ‘the hospitality sector’. Start with its 2024 P&L. Layer on every material government-driven change since, in the order it arrived: employer National Insurance, minimum wages, business rates, alcohol duty, packaging, waste, energy and regulation. Then take off the reliefs, allowances and grants, and look at what is left.

Each department will say its own measure is reasonable, and most of them will be right. The test asks what all of them do together to one business. The answer may be smaller than the industry claims. It may show that some of the support is worth more than critics allow. I would be happy with either result.

The Treasury says its package saves the average pub £1,650. I could not find a published figure for how far the same pub’s costs rose over the same period, so £1,650 could be most of the gap or a rounding error. Without that baseline, government cannot say which, and the next package will be designed with the same blind spot.

I don’t think anyone in Whitehall wants pubs to close. The failure is duller than that. Separate parts of the state make defensible decisions on separate timetables, and nobody owns the interaction between them.

The pub operator does that consolidation every month with a spreadsheet and a bank statement, because the business depends on it. Government should have to do the same before it adds the next line.