The government has announced it is to make changes to small brewers’ relief, reducing the threshold from which it starts to taper from 5,000hl of annual production to 2,100hl.
The government said it had taken the measure “to support growth, boost productivity, and remove ‘cliff edges’. The Society of Independent Brewers (SIBA) said it was “hugely disappointed” by the change. It has always argued that no brewery should lose any relief as the result of any reform.
SIBA chief executive, James Calder, said: “This position is now more important than ever, given the UK’s small independent brewers have not received the same level of support as the wider hospitality sector during the Covid-19 lockdown. Brewers have not been eligible for the business rates holiday or the £25,000 cash grants offered to the retail sector, including to many pubs.
“The minister has confirmed detail on the new scheme will be published as soon as possible, but without this detail we are unable to evaluate accurately who will win and who will lose, and by how much.
“What we do know is that there are around 150 breweries in the UK who, pre-Covid, sat between 2,100hl and 5,000hl of production volume, who will, under the proposals announced today, see the beer duty they pay go up.
“The Treasury has said that a technical consultation will be brought forward in the autumn, with the intention of agreeing the fine detail of this reform. It is important independent brewing comes together and lobbies the Treasury to ensure that they are aware of the full consequences of their proposals.”
Financial Secretary to the Treasury, Jesse Norman, also announced a post-EU exit alcohol duty review, as well as a review of the business rates system. He said: “The government recognises the need to reform the current duty system to support the alcoholic drinks and pubs sector in the longer term, and will publish a call for evidence before end September 2020.”
‘A fantastic opportunity for the government to save our pubs’
James Calder said: “The forthcoming alcohol review presents a long-awaited opportunity to fully assess and address the inconsistencies within the duty system, such as why global companies can pay a lower rate of duty on cider than the smallest independent brewer does on equivalent strength beer.
“We look forward to working with the Treasury to consider ways in which the system can be improved to make it easier for small companies to do their tax returns and ensure a fit and modern duty regime can continue to support our small independent brewers.”
The Campaign for Real Ale said the review into alcohol tax was a “fantastic opportunity for the government to save our pubs”.
Chairman, Nick Antona, said: “A preferential rate of duty on draught beer is a radical proposal that will really help by supporting and encouraging drinking in the supervised setting of the local pub. This will also create and sustain jobs, and level the playing field between pubs and cheap supermarket alcohol.
“We hope the government will act to change the business rates system in England, which penalises pubs and fails to recognise their valuable role as community hubs, which are vital in tackling loneliness and social isolation.
“The pub sector currently overpays in business rates by £500m a year, and rising rates are forcing hard-working publicans to push up prices for consumers or close their doors forever. The government must make the business rates system fairer for pubs to ensure their continued survival.”
The British Beer and Pub Association welcomed the reviews. It pointed out that the purpose of small brewers’ relief, which is now worth £75m to recipients, is to compensate for diseconomies of scale, as well as ensuring a huge choice of great beers for Britain’s beer drinkers.
It hopes the measures announced will build on the success of SBR, while supporting growth among brewers of all sizes by addressing the long standing distortions caused by the current structure.