The oldest pub chain in England raising the price by at last 16 pence a pint to cover rising national insurance and “living wage” rates?

The employment cost increases that start from 2 April 2025 are resulting in price increase for the British pint at the oldest brewer in England by upwards of 16 pence a pint.

From here:

Major pub chain to hike prices in huge blow for Britons as Reeves' tax raid slammed 'most unwelcome'

“Shepherd Neame, which operates 290 pubs primarily in the Southeast, said the two policies announced by the Labour government last year will cost the company approximately £2.6million annually.”

“The brewer, which employs about 1,600 people, is facing significant financial pressure from the upcoming changes.

Shepherd Neame, which operates 290 pubs primarily in the Southeast, said the two policies announced by the Labour government last year will cost the company approximately £2.6million annually.”

The threshold at which national insurance kicks in, has been lowered to £5,000 from £9,100 and the rate has been increased from 13.8% to 15%.

Let’s check the estimates of labour cost increases based on those numbers, using some back of the envelope numbers and some help from Brave AI.

“The company operates more than 300 pubs, inns, and hotels across the Southeast of England and employs around 1,500 staff across their estate, along with more than 270 employees at their head office and brewery.”

The number of employees is slightly different between City AM and Brave AI. But three is sufficient for a ballpark profile of Shepherd and Neame’s operations.

Head office and brewery - 270 staff at say, an average of £40,000 salary and benefits = £10.8 million.

Increase in National Insurance = extra 1.2% on £40,000 plus the drop in the threshold (9,100 - 5,000) £4,100 times 15% times 270 head office and brewery staff

= £129,600 plus £166,050 = £294,645

Okay, that’s the head office and brewery increase.

Now let’s estimate the increase for the other 1,230 pub staff across 300 pubs - an average of around 4 per pub,

From Brave AI:

“The average hourly pay for Shepherd Neame employees ranges from approximately £9 per hour for roles like Bar Staff to £10 per hour for positions such as Chef.”

We need to factor in the increase in the “living wage” also - from Brave AI:

“As of April 1, 2025, the real Living Wage in the UK will increase to £12.60 per hour, and in London, it will rise to £13.85 per hour. This represents a 5% increase from the previous rate of £12.60 in the UK and a 5.3% increase from £13.85 in London.”

Call it £13.00 pounds an hour for 3 bar staff - then from Brave AI:

“The average annual salary for Shepherd Neame employees ranges from approximately £22,450 per year for an Assistant Manager to £34,804 per year for a General Manager.”

Let’s call it around £30,000 a year for a manager/deputy manager.

Let’s assume the average pub consists of a manager/deputy manager plus 3 bar staff.

For the pub managers:

300 managers on £30,000 a year currently paying national insurance of 13.8% from £9,100 a year - 2,994/2 x 300 equals £865.260.

To

300 managers on £30,000 a year now paying national insurance of 15% from £5,000: equals £3,750 times 300 equals £1,125,000 for an extra £259.740.

And now the bar staff:

3 bar staff wages increasing from around £10 an hour to £13 pounds an hour - which will then be subject to the extra employment national insurance costs.

Assuming the 930-bar staff work a 40-hour week, costs will increase from

930 staff costing £10 an hour (£20,000 a year) and paying national insurance of (20,000 - 9,100) equals £10,900 at 13.8% times 930 staff equals around £1.4 million.

To:

930 staff getting £13 an hour (£26,000 a year) and paying national insurance of (26,000 - 5,000) equals £21,000 times 15% times 930 staff equals around £2.9 million pounds.

An increase of £1.5 million pounds.

Those aren’t the only price increases faced by the brewer.

Local taxes have increased by around 5% on each of its 300 pubs. Assuming the pubs pay an average of £2,500 pounds each, there is an extra £37,500 in local authority taxes then there’s the increase in costs charged for all the brewery supplies - the hops, malt, yeast, barley etc.

Water and sewage rates have gone up too, but I leave those aside.

Add it all up and it comes to over a £2.1 million hit straight to the bottom line.

The brewer says, “Despite the challenges, the company has shown resilience in its financial performance.”

In the context of “Nevertheless, underlying profit rose nearly 10 per cent to £4.2m after inflation fell last year.”

The “business model” includes raising prices.

From Brave AI:

“Shepherd Neame produces about 150,000 imperial barrels (290,000 hl) of beer each year, which is slightly less than its production output of 180,000 imperial barrels (290,000 hl) reported in 2020.”

150,000 barrels =… A typical beer barrel contains 11 imperial gallons, which translates into 88 pints.” So, 13 million pints (leaving a few pints in the bottom of each barrel).

Extra costs of £2,1 million implies an increase of around 16 pence a pint for all the Spitfire, Bishops Finger and Whitstable Bay it sells.

Here’s a few other snippets on the share price and other direct taxes on beer.

From Brave AI:

“On average, about 33.4% of the price of a pint of beer in a UK pub goes to taxes.4 This includes alcohol duty, VAT, business rates, and other taxes. For a typical pint costing £4.10, the tax component is approximately £1.37.”

“… the average cost of a pint in London is £6.50, with some pubs offering cheaper options and others charging more than £9.50.”

The Marxist labour government cannot understand concepts like the “Laffer Curve” where the higher the taxes the lower the revenue. The same applies to cigarettes, where the constat price rises have exploded the black market. Tobacco tax revenue is falling - not because people are giving up smoking, but because black market sales at discounts of up to 50% are rife.

The Chancellorette, Rachel from Accounts Reeves, has no experience or training in the “Laffer Curve” - she will raise taxes dspite having ridden over the top of the Curve - and raising taxes in the UK tp their highest level since WW2.

Imagine her reaction to the premise of dropping taxs by 10% in order to increase the tax take by 5% which would also increase GDP growth

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