Duty cheer for brewers from Brown's Budget

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Related tags: Progressive beer duty, Beer

More brewers are set to reap the benefits from progressive beer duty (PBD) following yesterday's Budget.Chancellor Gordon Brown announced that the...

More brewers are set to reap the benefits from progressive beer duty (PBD) following yesterday's Budget.

Chancellor Gordon Brown announced that the government is to double the production threshold for the tax relief from 18,330 barrels (30,000 hectolitres) to 36,660 barrels (60,000 hectolitres).

The move means that brewers such as St Austell, Jennings and Hook Norton now qualify for the sliding scale tax relief.

This is good news for the trade, which has been pushing the government to increase the limit.

Over the past year, smaller brewers have recouped the costs from the sliding duty scale while medium-sized brewers have missed out because their production exceeded the cut-off limit. They say the low level has been squeezing them out of the market.

James Staughton, managing director of St Austell Brewery, said: "We are delighted. It shows that it might have been an oversight to have left out breweries of our size in the first place.

"This is a welcome tonic that will allow us to market our own beers outside of our traditional marketplace. We lobbied for the rate to be raised to 200,000 hectolitres and I feel sorry for those brewers that are still over the threshold."

Keith Bott, chairman of the Society of Independent Brewers (SIBA), said: "The Chancellor has again proved his commitment to small business and helped guarantee the future of locally produced beer from small craft ale brewers across the UK."

However, there was some disappointment that the threshold had not been raised even higher.

Mark Hastings, director of communications for the British Beer & and Pub Association, said: "We would have preferred the Chancellor to extend this relief to the European level of 200,000 hectolitres, which would only cost the Treasury £3m. "However, we applaud this decision which recognises that beer duty is a constraint on the competitiveness of Britain's brewers."

Mike Clayton, managing director of Jennings brewery, said: "We have to be pleased that the Chancellor has moved in the right direction."

At a glance: how the Budget affects alcohol

  • 1p increase on a pint of beer
  • 4p increase on a bottle of wine
  • Sparkling wine, cider and spirits were granted a duty freeze.Spirits duty will remain frozen until the next general election.

Industry reaction to the Budget

Mike Maloney, partner at finance specialist KPMG, which covers the brewing industry​"The 1p tax rise on beer is interesting in view of the Alcohol Harm Reduction Strategy. On the one hand the government is asking the brewers to take a tough line on promoting alcohol, yet there has been no carrot to encourage that."

John Dunsmore, chairman of Scottish Courage​ "We are disappointed that the Chancellor has ignored the sound economic case put forward by the brewing industry and imposed a further increase in excise duty on beer, his fifth since coming to power. It's bad news for British pubs, British brewers and beer drinkers alike."

Steve Cahillane, head of Interbrew UK and Ireland​"UK brewed beer should be a source of national pride not only do UK brewers produce over 90 per cent of beer consumed here, our beer heritage and brands are sought after by overseas consumers as well as overseas brewers.

"Our rates of duty should reflect this pride and not punish it. This rise in duty will do nothing to address the pressures from other drinks categories."

Mike Benner, head of campaigns and communications for the Campaign for Real Ale​"The UK's high beer tax rates cause smuggling and this works directly against the objectives of the Alcohol Harm Reduction Strategy announced earlier this week. A tax rise is a flawed strategy which will cost jobs, increase smuggling and uncontrolled drinking and leave responsible beer drinkers out of pocket."

James Clarke, managing director of Oxfordshire brewer Hook Norton​"We are absolutely delighted that we now qualify for tax relief under the sliding duty scale. We had lobbied for the rate to go up to 200,000 hectolitres but it is good news for us. It will free up some money which we can invest in our pub estate."

Related articles:

Outcry over spirits stamps plan (18 March 2004)

Mixed Budget news for pubs (17 March 2004)

Related topics: Legislation

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