Who killed the pub: Gen Z or the Treasury?
My dad recently asked why Gen Z never goes to the pub. When he was a young adult, he says, he was there most evenings.
The usual answer is that Gen Z are health-conscious, antisocial teetotallers. It is a convenient story - and there is some truth in it. The share of 16- to 24-year-olds who do not drink is steadily rising. But over 13,000 pubs have closed since 2000, about a quarter of the total, and they are still closing at roughly one a day.
But, while some young people may have lost the taste for the pub, more simply lack the money.
Take a typical first-job wage at 18. Boomers and Gen X earned enough in an hour to buy about five pints. Millennials and Gen Z can buy about two. A pint has gone from about 12 minutes of work to about 30. Counting pints per hour strips out inflation, so it shows what a drink really costs a young person. (These figures use average manual pay before 1999 (1960s and 1980s data) and the minimum wage after, so the older ones are approximate.)
Other figures agree. Pint prices are up about 300% since 1990. Average salaries are up 136%. An hour of average pay now buys about 40% fewer pints than it used to.
Why has this happened? One explanation is that Britain taxes beer more heavily than almost anywhere in the EU. Only Finland charges more.
Duty, a tax charged on each pint according to its strength, and VAT take between 25-31% of the price of a pub pint. On the BBPA’s average £4.10 pint, that is about £1.14 for the Treasury: 46p of duty and 68p of VAT.
Importantly, duty is a fixed amount per pint. A student on the minimum wage pays exactly what a banker pays. (Of course, a student feels this cost far more acutely).
This high cost of drinking is a political choice - it's not a consequence of a prosperous economy. By way of comparison, a pint costs about £6.75 in London and £3.76 in Berlin. The UK minimum wage is about €14.87 an hour against Germany’s €13.90. The difference is the taxes on pint. Germany taxes a pint at about 6 cents while Britain taxes it at about 75 cents.
The Treasury sells alcohol duty as a health measure. In practice, it acts as a convenient way to raise revenue: about £12 billion a year. Heavy drinkers barely cut back when prices rise, so the tax lands mostly on everyone else. Ultimately, the Tax is there to raise money, not to nudge what we drink.
The fix is to cut alcohol taxes, simplify them and let people decide for themselves. That starts with beer duty, which Britain should cut towards European levels. It should also give hospitality a lower VAT rate, which, according to the BBPA, almost every other European country already has.
Separately, a flat duty of 20p per unit of alcohol would charge every drink the same, whatever its type, with 6p off in pubs so that they can compete with supermarkets. A pint of ordinary-strength beer is just over two units, so the relief would take about 14p off it.
A pint cost my father’s generation twelve minutes of work; it costs mine thirty. Gen Z aren’t boring - they can count.
Zak Siami