The chancellor has used his Budget speech to confirm that a draught duty cut for beer and cider in the on-trade will kick in from 1st August.
Jeremy Hunt said the 11% reducation was possible because of Brexit, meaning the government no longer had to follow European duty rules. He described this as the Brexit pubs guarantee, adding: “British beer is warm, but the duty on a pint is frozen.” That didn’t go down unversally well…
There will be full capital expensing, at least for the next three years, which will cost £9bn. This will help brewers to update spec and brew using the most sustainable equipment. Also, 12 Enterprise Zones will get a total of £80bn to help to deliver levelling up.
‘Bitterly disappointed’
“Today’s Budget is a huge disappointment for the people and the small businesses who actually run most of the UK’s precious pubs,” Paul Crossman, chair of the Campaign for Pubs. “Once again, the government has been persuaded to reach for beer duty as the ‘solution’ to the crisis for pubs when, in reality, this will make no meaningful difference.
“The government needs to finally stop pandering to the disingenuous lobbying of the big brewers and pub companies who now stand to get a potential profit windfall from this duty tweak, and instead listen to experienced publicans who will be bitterly disappointed at the lack of action in areas that could have made a real difference to the entire sector such as VAT and commercial energy costs.”
Vice-chair, Dawn Hopkins, added: “It’s incredibly disappointing, if alas not surprising, that the chancellor has provided no direct support for pubs in the Budget, despite the cost-of-living crisis and, worse still, is ending the current energy support for businesses, which will see energy bills spiral. If the government were serious about supporting pubs and hospitality, they would have kept this support, cut VAT, and finally announced the long-awaited overhaul to the business rates system they have promised again and again. Those promises are clearly hollow.
“The crass comment about warm beer shows that Jeremy Hunt doesn’t go to the pub and he certainly doesn’t understand the serious situation pubs, publicans, and small brewers are in. We will lose even more of our nation’s pubs and small breweries if this government continues to ignore calls for targeted support.”
‘First step towards excise duty reform’
“Beer is taxed at higher levels in the UK than almost any other European nation,” said Richard Bradbury, joint managing dirctor of T&R Theakston. “At a time of high inflation, we are disappointed that the chancellor has increased the excise duty rates in supermarkets and stores from August.
“However, we welcome the government’s decision to support drinking beers in pubs. We firmly believe that pubs play a critical role at the heart of their communities, reducing loneliness, and offering a place of warmth and safety during in difficult times.
“After the challenges faced by landlords over the past few years, we thank the chancellor for his recognition of the value of these British institutions, and for taking a first step towards excise duty reform.”
‘Post-Covid hangover’
“While it’s welcome that the chancellor has topped up the draught relief from 5% to 9.2%, by increasing overall duty by RPI (retail price index), the government has eroded the benefits of the wider big bang changes to the alcohol duty system that are being introduced in August,” says SIBA chief executive Andy Slee.
“We are also disappointed in the lack of support for pubs, bars, and taprooms, which are a critical part of small brewers’ businesses and are facing existential threats from energy price hikes, a cost of living crisis and other inflationary costs.
“The Craft Beer Report, launching tomorrow, shows the extent of the stubborn post-Covid hangover for pubs, with a worrying 20% of people having not visited a pub in the last 12 months.”
‘Still being hit with higher costs’
Nick Mackenzie, chief executive of Greene King, said: “We are pleased to see that the chancellor has listened to the pub industry and increased the relief on draught beer — an important step to support the Great British pub. However, the devil is in the detail, and we are concerned that the extended draught relief will still not mitigate the challenging headwinds UK pubs face.
“Pubs are in desperate need of the chancellor’s ‘Brexit Pubs Guarantee’ as they are still being hit with higher costs on everything from energy to food. We look forward to seeing more detail on how the chancellor’s announcements today will unlock barriers to work and investment, which can help the pubs and brewing sector tackle our current challenges and be able to contribute to the country’s economic growth.”
‘Pave the way fo permanent growth’
Paul Davies, chief executive of Carlsberg Marston’s Brewing Company, said: “I’m pleased to see some positive steps taken by the chancellor today to support the Great British beer and pub industry, such as the draught relief discount.
“While I hope the alcohol duty review will help drive innovation in the low- and-no category, supporting moderation, the hike in alcohol duty, from August 2023, will limit brewers’ ability to invest in the UK and potentially result in higher prices for consumers, whose wallets are already squeezed with the cost-of-living crisis.
“While there are some encouraging signs of support from the government in this Budget, we simply need more. Our sector still requires support, clarity, and a long-term plan for investment to pave the way for permanent growth, and today we didn’t get this.”
‘Unlock growth opportunities’
Emma McClarkin, chief executive of the British Beer and Pub Association, says: “This Budget was a make or break moment for pubs and brewers who have been running out of road for too long, and whilst the chancellor’s efforts to support our pubs and breweries are welcome, we look forward to seeing how the ‘Brexit pubs guarantee will deliver for our sector.
“The cut to draught duty as part of the alcohol duty reform is positive, and we hope that it will result in a boost for our pubs this summer. “However, the fact is our industry will be facing an overall tax hike, not a reduction come August. Duty on non-draught beer will rise and the measures introduced today won’t rebalance the catastrophic impact soaring inflation and unfair energy contracts are having on both pubs and the breweries that supply them.
“As 1st April rapidly approaches, businesses are also nervously awaiting what’s next for their energy costs, and a lack of support in today’s announcement will have a direct impact on their ability to keep their lights on and doors open.
“We need the chancellor to unlock growth opportunities for businesses of all shapes and sizes. We look forward to seeing how his measures on investment, people, and skills will lay the foundations to allow our pubs and breweries to continue to create jobs and help regenerate local economies in every part of the country.
“The Chancellor highlighted how our pubs are the most treasured community institution, and we appreciate his efforts to provide some relief, but a lack of immediate support in today’s Budget will still put the future of many of them at risk. Having recognised the importance of our pubs and brewers, we look forward to working with the government to resolve the fundamental issues holding our pubs and breweries back, including reforming business rates and reducing the unfair tax burden on our sector.
“It is still tough out there for our pubs and breweries and so we’re encouraging people to get out and support their much-loved locals.”
‘Alcohol taxes have been eroded’
“Over the past decade, taxes on alcohol have been eroded by inflation to the point that beer duty is 28% less than it was in 2013,” said Aveek Bhattacharya, research director at the Social Market Foundation. “The consequences were inevitable — cheaper alcohol means more drinking, more drinking means avoidable deaths, and thousands of people are estimated to have died as a result.
“In 2019, the Social Market Foundation proposed differential duty rates for beer in pubs and beer in supermarkets to try and break this cycle.That change will come to fruition in August, and it has allowed the chancellor today to ensure that the cheapest alcohol consumed by the most harmful drinkers will rise in price while also offering some good news to the politically potent pub trade.”
‘Measures fall short’
Sam Martin, chief executive of Peckwater Brands, said: “Hospitality is a lynchpin of trade and employment, and can be a major driver for economic growth and recovery. Yet the sector is also more significantly impacted by today’s challenges than most, as they are both energy intensive and subject to the inflated price of goods, notably food costs.
“To allow hospitality to thrive, businesses required a major overhaul of the business rates system, a shot in the arm to staffing, and increased support with energy costs. The measures laid out for hospitality in the Spring Budget fall short of the level of support that industry leaders have been crying out for over the past year.
“Hospitality can be a driver for the economy and a source of both jobs and tax revenue, but without the right conditions to grow, we will likely see businesses shut down by high business rates, unaffordable tax bills and short staffing. Short-term support with energy bills may keep the lights on in the coming months, but without further action, the possibility of a return to pre-pandemic levels appears slim. I only hope more can be done to prop up businesses affected by rising costs, and that people will continue to support pubs, bars and restaurants in their communities.”
‘A brake on growth’
Conor Shaw, chief executive of workforce management specialist Bizimply, says: “Hospitality operators will welcome the measures announced in the Budget aimed at encouraging older workers back into employment. However, if they want to entice these experienced workers back into the workforce, they will need to meet them halfway and support the work/life balance that many older workers are looking for.
“When we surveyed our hospitality customers in January, 30% said they do not expect front-of-house recruitment problems to improve this year, rising to 60% who do not expect kitchen recruitment problems to improve this year. That’s a brake on growth which is holding hospitality back.
“While there are plenty of older people with hospitality experience who could help fill those vacancies, it’s not as simple as ‘getting the over-50s off the golf course’, as the Chancellor put it earlier this year. Older workers will feel that their decades spent in the workplace have earned them the right to enjoy some leisure time, but equally many of them are likely to have a range of commitments, not least of which can be helping their own children to work by providing childcare or school runs for grandchildren.
“Of course, employers need to know that they have enough staff available at the times they need them, but those who have robust workforce management systems in place to give staff maximum notice of shifts, and enable employees to flag up their other commitments, will be best placed to attract experienced staff back into the workplace.”
‘Facing an uncertain future’
Steve Alton, chief executive of the British Institute of Innkeeping, said: “Many of our members had no choice but to take unfair and untenable energy contracts, when prices were at their highest from last summer, and the impact of this, combined with wider inflation and wary consumers with less disposable income, has left their businesses fragile and facing an uncertain future.
“Without further support from government, Ofgem must now step in urgently to tackle the energy suppliers holding our sector hostage with sky-high standing charges and energy prices that will, in many cases, be three to four times that of 2021 rates. Forcing suppliers to allow businesses to recontract at the much lower rates now being seen in the market needs to be prioritised, as without it, many otherwise viable pubs will be forced to close.
“The freeze on duty rates in the short term, and the increase on draught relief from 5% to 9.2% in the summer will be welcome, if felt directly by pubs. In addition, however, the actual impact will depend heavily on the RPI rise that will be applied alongside this relief from 1st August.
“The positive steps taken by government to support families with enhanced childcare support, a freeze on fuel duty, and other measures, may provide some confidence to allow consumer spending to rise, but for the immediate future, pubs will be facing significant trading challenges.
“Our pubs provide accessible, skilled jobs in every community, and will be key to providing flexible opportunities in every area of the UK, aligning with the government’s policies on getting people back into meaningful employment. They can only do this if they are supported to thrive as local businesses, and this Budget has absolutely missed the opportunity to help pubs struggling to cope with a perfect storm of challenges.
“Outside of the immediate issues our members are facing, we will continue to make the case for a full overhaul of the outdated and unfair tax system that affects our pubs, specifically VAT and longer-term business rate reform.”
