Thanks Gordon, but it's small beer

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Related tags: Pbd, Progressive beer duty, Pint

In the middle of last week's parliamentary kerfuffle about student fees, the BBC broadcast some comparative figures about university life in Britain...

In the middle of last week's parliamentary kerfuffle about student fees, the BBC broadcast some comparative figures about university life in Britain and Germany. One figure that leaped from the screen showed that a pint of beer in Germany costs 80p while in this country it's around the £2.20 mark. As it's unlikely that any government will introduce subsidised beer for students, we can assume that the cost of a humble pint will continue to be nearly three times higher here than in Germany. I use these figures as a backdrop for the Budget proposals to increase the scope of Progressive Beer Duty (PBD) for smaller brewers at the same time as the chancellor placed a penny on the price of a pint. Gordon Brown has been hailed yet again as the saviour of the craft-brewing sector, but you need to study the small print before raising a glass in the direction of 11 Downing Street. When Mr Brown first brought in PBD in 2002, it affected only the smallest micro-breweries that produce up to 18,000 barrels a year. At the time, Chancellor Brown told parliament this would help "most" of Britain's brewers: he failed to point out that the country's 400 micros account in total for only around 1% of beer production. Now he has raised the production ceiling to 36,000 barrels. This means that the likes of Batemans, Belhaven, Gales, Harvey's, Hook Norton, Jennings, McMullen, St Austell, Timothy Taylor and around a further dozen companies will save a hefty sum in duty every year. It's estimated that these breweries will each save around £100,000 a year. It means the companies concerned can invest in new equipment and can spend a little more to promote their beers in a market place saturated by national brands. Before we get too excited, the level of PBD falls far short of the mainland European ceiling of 122,200 barrels, which both the British Beer & Pub Association and the Campaign for Real Ale have called for. And as the scheme is a tapering one, not all the breweries will qualify for a full cut in duty. While some observers consider the widening of PBD will cost the Treasury some £3m a year, more sceptical minds think it could be as little as £700,000. Whichever figure you accept, they fall a long way short of the estimated £86m Brown will gain as a result of his Budget increase of a penny on a pint. As the Chancellor was raised as a strict Presbyterian, he will be keenly aware of the biblical quotation: "What the Good Lord giveth, he also taketh away". I met Stuart and Jacquie Bateman last week, followed by James and David Clarke at Hook Norton: both families were like the cat that had found the cream. I'm delighted that some 20 small regional brewers will benefit from PBD, but we shouldn't be fooled into thinking the Government has introduced Christmas a tad early this year. The benefits of PBD will not be passed directly to the consumer in the form of cheaper beer. On the contrary, beer drinkers will be hit by an increase of at least a penny on the price of a pint. By the time wholesalers, distributors and retailers have also increased prices to maintain their margins, the real figure across the bars of the nation's pubs is likely to be 3p or 4p on a pint. This comes in the wake of swingeing price increases imposed by some bigger brewers in recent weeks, which means the price of a pint is likely to rise by as much as 12p. When the cheering has ended and the party is over, both brewers and drinkers will find themselves with a mighty hangover. Britain, after Ireland, continues to pay the highest duty on beer in the European Union. Pound for pound, we may much more tax on beer than we do on wine. It's a policy that is driving further nails into the coffin of one of our greatest industries. As for me, with a name like Protz, I plan to become a mature student at a German university where I can enjoy some of the world's greatest ­ and cheapest ­ beer. Auf Wiedersehen!

Related topics: Beer

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