Where did it all go wrong?

By James Wilmore

- Last updated on GMT

Related tags: Industry, Lobbying, Pint, Pint glass

During hangovers there is often much soul-searching and a number of uncomfortable questions that need asking. The hangover from Alistair Darling's...

During hangovers there is often much soul-searching and a number of uncomfortable questions that need asking. The hangover from Alistair Darling's first Budget is no different.

Despite a huge lobbying effort by the trade, the Chancellor announced an across-the-board inflation-busting six per cent hike on alcohol duty. This included 4p on a pint of beer, wine up 14p a bottle and cider up 3p a litre.

So what went wrong for the industry and what lessons can be learnt?

According to the health lobby the government is supposed to be in the pocket of the alcohol industry.

Well, that now looks like a cruel joke. The hike on a pint will be felt across the pub industry, with the Campaign for Real Ale (CAMRA) predicting it could force up the price of a pint by 20p.

The Chancellor said the extra money from alcohol taxes would be used to tackle child poverty. But industry observers were left dumbfounded, pointing out that with alcohol's price elasticity and with consumption falling, revenues for the Treasury will decrease.

Not only this - taxes will rise by two per cent over the next four years.

As the dust settled The Publican spoke to some key industry players about the lobbying effort and asked what can be done in the future.

The pub company

Nigel Turpin, group corporate affairs director for Punch Taverns said the industry had lobbied "long and hard" to persuade the government not to penalise responsible pub-goers. "Sadly this fell on deaf ears," he added.

"We shouldn't forget the fact that pub licensees control both the purchase and the consumption of alcohol in a responsible and regulated environment."

On how the price rises will be passed on, he said: "It is likely that we will pass on the duty increases to our customers on a pub-by-pub basis in our managed estate, appropriate to the local market."

"Our licensees in the leased estate will also be reviewing their pricing to take account of the increase in wholesale prices."

Licensees

James Cockerill, licensee of the Rainbow & Dove in Leicester, feels the industry has not been represented well enough in Whitehall.

"We didn't see loads of pubcos defending their tenants and lessees," he said. "We have just put our prices up, and with the recent wholesale increases and Budget increases we'd have to charge an extra 18p a pint to make a 50 per cent margin. The government was looking for someone to blame for binge-drinking and the industry was an easy target."

Graham Rowson, licensee of the Plungington Tavern in Preston, Lancashire, says he was "not at all satisfied" by the lobbying efforts of the industry. He believes the industry should have one single voice.

"There should be a central fighting fund that all these bodies should pay into," he said. "We need to stand up as one as an industry and then we will be stronger."

Trade groups

The BBPA led the trade's efforts in campaigning for the Chancellor to go easy on beer duty. It wrote to all MPs arguing that raising tax on beer would be 'self-defeating' because it would cut government revenues. In addition, chief executive Rob Hayward and Shepherd Neame's chief executive Jonathan Neame presented the trade's case to the Treasury.

Mark Hastings, communications director at the BBPA said: "Alcohol was seen as an easy way of singling out a tax rise on the 90 per cent of the population who drink. It would have been a huge risk to put up tax on income.

"What is equally clear after conversations with MPs and media is that the industry's message was heard loud and clear and understood, but in the end this message was ignored."

In looking at answers, he says: "We have to look at why this message was ignored and adapt and change our strategy for our circumstances. Everyone was surprised because this formula is a step-change from the policy over the years. It's an indication of the desperate situation of government finances."

Nick Bish, chief executive of the Association of Licensed Multiple Retailers, said: "The Chancellor ignored his own advice

"It's hugely disappointing because he previously said he wasn't going to use the blunt instrument of tax to deal with the problem of binge-drinking.

"People are angry, frustrated and disappointed. The problem is the industry is regarded as self-healing - it's the idea that the government can throw anything at the trade and we will cope with it.

"All the initiatives we have been involved in have blown back in our faces. Individual licensees are having a terrible time and he has failed to recognise that.

"Maybe we throw more money at a PR campaign, because we are not winning the intellectual argument."

Brewers

Alistair Darby, managing director, Marston's Beer Company

As chairman of the All-Party Parliamentary Beer Group steering committee, Darby said he felt "deeply disappointed" from a personal point of view.

"The argument we presented was very cogent and well presented and people such as Jonathan Neame have worked their socks off on this issue," he said. "It was really galling to get a 4p increase - we felt we might only get a 1p rise.

"The health lobby will be doing cartwheels at these increases, because there are also these two per cent rises for the next four years. The other thing that is frustrating is that because of continued duty rate rises, the Treasury will actually receive less tax from the on-trade and people will buy more beer in the off-trade."

Rupert Thompson, managing director, Wychwood Brewery

"There were no clues there would be such a draconian move. It's difficult to understand why they did what they did," said Thompson.

Responding to the suggestion the money will go to help poor families, he added: "That's disgraceful, it's a very cynical approach. Why has he chosen that tax, why not something like petrol? If this is about binge-drinking, then this is not the right way to tackle it.

"Either the government sums are wrong or our sums are wrong."

In terms of moving forward Thompson said the industry must try to understand why it is still seen as the "villains of the piece". He added: "We will have to re-double our efforts to show that we are a really important part of British society."

William Lees-Jones, managing director, JW Lees

Lees-Jones feels the trade must ask itself some serious questions. "The drinks industry only has itself to blame," he said.

"The trade's lobbying is particularly weak and the arguments are all very pompous. The industry has a bad dialogue with government and it was easy for it to raise taxes on alcohol. Clearly, whatever we are doing is not working. "We are not about to shut up shop, but we feel we have been screwed."

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