Has the beer tax cost 29,000 jobs?

1 March 2013

"The hated beer tax has cost 29,000 young pub workers their jobs, The Sun can reveal. Since it was introduced in 2008, an estimated 5,800 boozers have shut their doors — leaving an army of 16 to 24-year-olds out of work."

The Sun, February 28, 2013

As part of the Sun's campaign to Axe the Beer Tax, the newspaper published a brief article outlining the after effect of the 2008 introduction of beer tax. 

In its 2008 budget, the Labour government increased the rates of duty on alcoholic drinks by 6% in real terms, and ruled that rates would rise by 2% above the rate of inflation each year until 2014/15. This was reviewed by the Coalition in 2010.

We investigated claims surrounding the chain reaction to the duty escalator when it was claimed that we pay five times as much tax on beer than Germany and over 40 per cent of all alcohol duties in Europe, that as many as eighteen pubs are closing in Britain every week, and that we consume 1.5 million fewer pints of beer per day since 2011.

Today we're told that 29,000 young pub workers have supposedly lost their jobs as a result of the closure of 5,800 watering holes. 

In its article the Sun doesn't cite a source for its claim, but when contacted the author confirmed the figures came from the British Beer and Pub Association (BBPA).  

In turn, the BBPA told us the research was conducted by Oxford Economics, a research firm specialising in economic forecasting. 

The author of the research, Andrew Logan, confirmed that the 29,000 figure is an estimate. He told us:

"The estimate of 29,000 young pub workers losing their job since 2008 is made using an econometric equation that explains the sales volume of beer in pubs, Ernst & Young's estimate of the number of jobs in pubs due to beer sales and Office for National Statistics' Labour Force Survey data on the age of people employed in the hospitatility sector. 

"HMRC data show that since the beginning of 2008 excise duty on beer has increased by 42%.  This increases the price of beer in pubs, which lowers demand for beer. 

"The increase in the price of on-trade beer caused by excise duty is combined with the estimate of the own-price elasticity of demand for beer in the on-trade to produce an estimate of the reduction in sales due to the increase in excise duty. 

"This percentage fall since 2008 is applied to the estimate of the total number of young people employed in pubs due to beer sales."

In short Oxford Economics made use of two equations to compare the state of the industry now, as a result of the beer tax, with a forecast of what the labour market would have looked like had the beer tax never been introduced. 

It is clear from his words that this was an estimate, something which wasn't made clear in the Sun's article.  


Flickr image courtesy of Lynne Fennell

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