One campaign succeeds, another fails. Relief and despair in equal measure from the beer and hospitality industry after yesterday’s Budget.
On beer, the duty remains high. At first it was thought the Chancellor intended no duty rise — which although not a cut, which the likes of the British Beer and Pub Association (BBPA) and the Campaign for Real Ale (CAMRA) had sought — would not have gone down too badly.
But no, the wording was “no changes to previously planned upratings of duties on alcohol” and that uprating was 3.9% — an increase of about £130m a year.
BBPA chief executive, Brigid Simmonds (pictured), said: “When it comes to beer duty, a return to unpopular beer duty rises, with an extra 2p duty on a pint, is not good news for the British beer industry and, in turn, pubs.
“Business rates, auto-enrolment of pensions, the national living and minimum wage, and the apprenticeship levy were already adding the equivalent of 5.3p in beer duty.
“Beer tax has now risen by 43% the past ten years. This latest rise will mean 4,000 fewer jobs this year, mostly in pubs. Tax rises on all alcohol will add £125 million to the cost base of pubs.”
She added: “Britain’s beer taxes are three times the EU average, and an astonishing 13 times higher than those of the largest producer, Germany. If we are to compete in the future and as we move towards the challenges of Brexit, action must be taken on tax, to ease the burden on a beer and pub industry that supports around 900,000 UK jobs.”
CAMRA national chairman, Colin Valentine, said: “UK beer drinkers, pubs and brewers have been let down by the Chancellor’s decision to increase beer duty for the first time in five years.
“The announced 2p a pint increase marks a return to the days when the much-hated beer duty escalator contributed to 75,000 job losses, 3,700 pub closures and a 24% fall in beer sales in pubs. The rise in beer duty will ultimately hit consumers in their pockets and lead to pub closures across the country.”
There was better news on business rates, though, with a temporary £1,000 discount on business rates bills for all pubs with a rateable value of less than £100,000.
CAMRA welcomed the relief and called for it to be made permanent and increased further in future Budgets. But it pointed out that, while the discount will provide welcome relief for the majority of pubs, not all will benefit as the relief does not apply to the largest pubs, so a minority are still faced with very large business rate increases.
The BBPA argued that the proposals would have deterred pubs from appealing unfair business rates, and there was a concern that ‘reasonable professional judgement’ would have meant that decreases in bills following appeals, of up to 15%, would not be paid back to businesses that had successfully appealed.
Ms Simmonds said: “I very much welcome that the Government has listened to our concerns on this point and withdrawn this proposal. I completely understand the need to make the appeals system as streamlined and efficient as possible, but this should not be at the cost of fairness for pubs.
“Ratings assessments should be accurate and licensees must receive a fair hearing.”
Mike Benner (pictured), managing director of the Society of Independent Brewers, said: “The £1000 reduction in business rates for pubs with a rateable value below £100,000 is welcome support for the sector, although much more needs to be done.
“But this contrasts sharply with the two pence increase on beer tax, which is a blow for the millions of people who enjoy a pint of British beer in their local pub and also for Britain’s 1,800 small brewing businesses across the country.
“We called for local brewers and community pubs to be supported with a cut in beer duty to build confidence, enable investment and create jobs in light of increasing costs and uncertainty, but the Chancellor’s decision will be a setback.”
Chris Hearn, director of the Loddon Brewery, in South Oxfordshire, said: “Today’s 3p increase in beer duty is a kick in the teeth for publicans, brewers and beer drinkers.
“The beer industry is already struggling with falling cask ale prices, market saturation and hikes in business rates, and the Chancellor has shown a complete disregard for the current situation. He hasn’t listened to the industry…
“The UK is enjoying a huge beer boom at the moment, but today’s announcement will do nothing to enhance this.”
Sue Cooper, co-owner of the Little Valley Brewery, in Yorkshire, said: “This Budget has been one that is both disappointing and damaging for the beer industry. Despite calls from the industry for the Chancellor to cut beer duty, we have been ignored and beer drinkers are now facing a 3% increase in beer duty.
“This is a huge setback for the brewing and pub industries, which employ around 900,000 people and are already under immense pressure in an ever-competitive environment. Our question to Mr Hammond is simple: how do you expect one of the nation’s strongest and much-loved industries to thrive when faced with this adversity?
“Analysis from Oxford Economics shows that an increase in duty doesn’t create a pot of gold and would, in fact, put an estimated 5,300 jobs in jeopardy. With this in mind, we find it hard to justify the added pressure from the government on our industry, which has shaken confidence and removed any reassurance for the future when it is needed most.”
Innis & Gunn founder, Dougal Sharp, said: “We welcomed the freeze in beer duty last year and we were hoping for a similar positive incentive from the Chancellor this time around.
“It is incredibly disappointing to see an increase in alcohol duty in the latest budget. Consumers are going to be hit hardest by this rise and I fear for the impact it will have on pubs already facing enormous pressures.
“We’re in the middle of a beer boom in Scotland, with over 100 active breweries for the first time in over a century. We have recently invested over £750,000 in increasing capacity at our own brewery, and the government should be doing all that it can to support our industry.”
Angus Jackson, from property consultancy Bruton Knowles’ Gloucester office, said: “Although our economy appears to be much stronger, many pubs are either still suffering from previous years’ uncertainty, or, as in many cases, have had to close their doors permanently.
“Government has pledged to offer a £1,000 discount to pubs with a rateable value of less than £100,000 to help protect pubs against increased business rates, which will be available to almost 90 per cent of pubs.
“We are pleased money has been set aside for this industry. It is encouraging government recognises the importance of pubs in the rural economy as they are often the hub of local villages and towns.”
