VAT rise hits prices in FiveSixEight
Becks to remain at £2 per pint but other drinks see price hikes as Government introduces controversial 2.5% VAT increase
Spendthrift students returning from their Christmas break might have noticed a subtle shift in the cost of food and drink around campus. The recent rise in the rate of VAT has been cited as the main driver of the cost increase, although other pressures – including an increase in fuel duty, also put into place this month – have contributed to the mounting financial pressure.
The Director of Commercial Services, Jane Neary, initially suggested that student prices would not be affected, saying: “The VAT won’t affect the student prices.” When challenged she explained that “a few product prices may have been very slightly affected” by the application of the VAT increase on visitor prices. Although student purchases on campus are not subject to VAT – hence the swipe card discount – Mrs. Neary told Felix, “because of the link between the [student and visitor/staff] prices on the system, we’ve had to round up or down certain student prices.”
The prices of popular food and non-alcoholic drink items show both small percentage increases and decreases. Prices on average have seen an increase of 0.5%.
Prices at the Union have risen more significantly. Lagers have gone up by around 10p, a 5% increase on last term; the price of spirits has increased by 20p on average, up 10%; soft drinks have seen an increase of 5p. Peanuts have risen by 50% from 50p to 75p.
A Union spokesperson told Felix that the reason the increase in price on certain items was larger than the rise in VAT was due to a number of factors, including other price pressures. There was a need “to apply a 3% increase” unrelated to VAT at the start of the academic year but the Union had held back that increase to “avoid changing prices twice during the same academic year.”
The spokesperson went on to say that the Union “was prepared to incur the cost [of the VAT increase] in certain circumstances”. For example, in maintaining “the Wednesday night offer of £1.50 a pint and all week long £2.00 for a pint of Becks or IPA.”
Regarding the large jump in the price of peanuts and crisps, the spokesperson said that the Union had previously been selling these items at “below the normal profit margin”, in part to compensate for “the [previous] lack of facilities to supply [high-quality] food.”
The raising of VAT from 17.5% to 20% has been the subject of serious controversy. A recent survey revealed fears amongst senior managers that retailers will use the confusion of the tax hike to mask the raising of their prices well beyond the VAT rate, while opposition leader Ed Miliband branded the rise as the “wrong tax at the wrong time.” George Osborne, the Chancellor, maintained that the rise was the most “progressive” option available.
