Reducing the tax paid on draught beer destined for the pub could create more than 8,000 jobs and result in a £265 million boost to the national economy. That’s according to new research by the Centre for Economics and Business Research (CEBR).
It shows that setting draught relief at 50% in the forthcoming Budget could lead to 76m extra pints being sold in pubs, with £152m in additional taxation going to the Treasury.
A more modest increase to 20% from its current 9.2% rate could still see an extra 2,251 jobs, 20m more pints sold, and £70m for the economy, with an increased contribution of £39m to the Treasury. Many of the costs would be offset through additional sales and increases to other taxes.
The new research has been commissioned by the Society of Independent Brewers and Associates (SIBA), the Campaign for Real Ale (CAMRA), and the British Institute of Innkeeping (BII).
Introduced last year, draught relief allows the chancellor to fine-tune alcohol duty decisions to support the UK’s community pubs and brewing sector. It means that beer which is packaged into large containers, such as kegs and casks, and mostly sold across the bar in community pubs, benefits from a lower rate of beer duty.
Currently, alcohol duty is due to increase by the retail price index measure of inflation in February, unless the chancellor makes an announcement in the Budget on 30th October. This comes at a time when 50 pubs a month have shut in the first half of the year, and around 70 breweries have closed for good so far in 2024.
“Pubs and breweries make a huge contribution to our local communities, but pay way more than their fair share of tax”, said Andy Slee, chief executive of SIBA. “This is the Chancellor’s opportunity in the autumn Budget to use decisions around alcohol duty to provide targeted support to our pubs and independent breweries by increasing the draught relief to 20% or more.”
Tom Stainer, chief executive of CAMRA, added: “The draught relief is a new tool in the chancellor’s toolkit that enables the government to favour our pubs and breweries in the tax system which provide so much benefit to our local towns and cities.
“Brewers and pubs are still recovering from the impacts of the pandemic and trading remains tough, so increasing the draught relief to 20% would be a real boost for the sector.”
Steve Alton, chief executive of the BII, said: “Boosting the draught relief would reduce the tax burden on thousands of pubs in every community and help to safeguard their futures. Our pubs are essential local businesses, foundational in their local economies and at the heart of their communities.”
