Brewers have engaged in a war of words as proposed reform of small brewers’ relief was revealed. The announcement came though a ministerial statement, so is not set in stone, and consultation will continue this autumn, the Treasury told Beer Today.
Photograph: Amie Johnson
The Small Brewers Duty Reform Coalition, which includes many well-known brewers, campaigned to get SBR reviewed on the basis that it failed to reward investment and efficiency, trapping many small brewers at certain stages of growth.
The problem was that once a brewer hit production levels of 5,000 hectolitres a year, they had to pay much more beer duty. Smaller brewers wanted to see a smoother rise in duty past the 5,000hl mark, rather than the current cliff edge. This week’s proposal, instead, suggests dropping the threshold to higher duty to 2,100hl a year.
The Treasury told Beer Today that a technical consultation will be brought forward in the autumn. The government will also consult on the potential for a grace period for small breweries that decide to merge.
A Treasury spokesman told us: “We invest over £65 million per year in craft brewing through Small Brewers’ Relief. We’ve consulted with hundreds of breweries who have told us that the relief was being withdrawn too quickly, and therefore preventing their businesses from growing.
“To support these small breweries, our proposals will mean that they’ll still benefit from the relief as they gradually expand their businesses, rather than having an all or nothing approach where it’s rapidly withdrawn above a certain level.
“The smallest 80% of breweries will be unaffected by these proposed changes, and we look forward to working with the industry as our consultation progresses.”
There is much anger in the beer world at the proposed drop to 2,100hl. Templated letters of protest to MPs have been drawn up. There is plenty of time to let your MP know your feelings. Worringly, however, the move has divided the usually cohesive independent brewers.
Infuriated by the decision of the Govt to reduce the threshold at which Small Brewers Relief starts?— James Beeson (@BeesonOnBeer) July 21, 2020
I've written a template anyone can use to send to their Local MP. Share this far & wide and make the strength of feeling within the industry known! 💪https://t.co/etAoiSgusR pic.twitter.com/bGJhiqPsb8
Timothy Taylor drew venom even from its own from fans on social media by defending the “modest changes”. Chief executive, Tim Dewey, said: “All individuals and groups had extensive opportunities to put their perspectives and data to the Treasury during its review; certainly SIBA (of whom we are a member) was extremely active in this regard.
“The Treasury has now come to its initial broad conclusions, which are extremely modest in the context of the overall scheme and, unlike SIBA’s proposal, cost neutral for a government in an (even more) difficult financial position.”
He also pointed out that the cliff edge meant that mergers and acquisitions among small brewers were very challenging (two 3,000hl brewers merging would immediately place them above the 5,000hl cliff edge at a stroke). “Not only will the tapering highlighted above help with this, but we are pleased to see the government has also announced it is willing to consider some transitional relief in these instances.”
The Society of Independent Brewers (SIBA) released a statement yesterday, signed jointly by chairman Ian Fozzard and chief executive James Calder, in which it recognised that, although it had campaigned for SBR reform, it had always insisted that this should never be at the expense of the small brewer.
SIBA has published proposals for reform that would cost the Treasury £9m — less that a quarter of 1% of beer duty receipts. It also criticised the lack of transparency of the Small Brewers Duty Reform Coalition, which does not reveal all its members.
Mr Fozard and Mr Calder signed off by saying: “Whilst the SBDRC are crowing that this is a ‘done deal’, there is still everything to play for.”