Budget 2012: Pub industry condemns beer duty rise

By Adam Pescod

- Last updated on GMT

Related tags: Duty escalator, Beer, Tax, Alcoholic beverage, Government

Budget 2012: Pub industry condemns beer duty rise
Pub companies and trade groups have expressed their dismay at the Chancellor’s decision to maintain the alcohol duty escalator in the 2012 budget, which has resulted in a 5% rise in duty - to come into force at midnight on Sunday.

Pub companies and trade groups have expressed their dismay at the Chancellor’s decision to maintain the alcohol duty escalator in the 2012 budget, which has resulted in a 5% rise in duty - to come into force at midnight on Sunday.

In his speech to the House of Commons, George Osborne said: “I have no further changes to make to the duty rates set out by my predecessor.”

He added: “The Government will shortly be publishing its Alcohol Strategy to address the growing problem of alcohol abuse, and the many billions of pounds it costs our NHS and criminal justice system.”

The alcohol duty escalator was introduced in 2008 and has seen beer duty rise by 2% above the rate of inflation each year. The new rise in duty is calculated according to an expected inflation rate of 3% in September 2012.

More than 100 MPs had supported the industry’s calls to scrap the escalator in this year’s budget, but they have not been heard by the Chancellor.

Commenting on today’s 5% rise in beer duty, Brigid Simmonds, chief executive of the British Beer & Pub Association (BBPA), said: “This is a huge lost opportunity to put British jobs and pubs first. Beer tax has now risen by 42 cent since the misguided ‘escalator’ policy was introduced just four years ago. It means the loss of over 5,000 jobs this year, and hundreds of pub closures.

“Since 2004, the tax on beer has risen by 60 per cent, but tax revenues have fallen far short, with only a 10 per cent rise in duty revenues despite the huge toll in lost jobs and pubs – and lost revenue through VAT as beer sales have fallen by 25 per cent. It beggars belief that further hikes are planned next year. The Government must rethink this damaging policy before even more harm is done to the British brewing and the pub trade.

“Successive Chancellors have ignored the views of industry, consumers and indeed large numbers of their Parliamentary colleagues for far too long.

“We need a full debate in Parliament about the wider impact the duty escalator is having on Britain’s brewers and pubs, and the hard-pressed British beer-drinker. The UK already has the second highest beer duty rate in Europe and British consumers pay 40 per cent of the EU’s beer tax bill, despite only drinking 13 per cent of its beer.”

The BBPA has also joined with CAMRA (the Campaign for Real Ale) and SIBA (Society of Independent Brewers), calling for those who support Britain’s beers and pubs to sign the e-petition to ‘Stop the Beer Duty Escalator’.

Mike Benner, CAMRA chief executive, added: “The fact Britons are forced to pay over 40% of the EU beer tax bill, but consume only 13% of the beer sold in Europe, is remarkable.

“British beer in a pub is so heavily hit with duty and VAT, the tax man’s whirlwind hikes translate to him guzzling a third of every pint served, a shadow cast over the beer drinker depriving people of an affordable night down their local.

"Such high taxes on beer are totally unsustainable, and therefore CAMRA is launching a consumer fight back in a bid to make the Government see sense. We today urge all beer drinkers to visit www.camra.org.uk/saveyourpint to get behind this new industry-backed e-petition to help safeguard the future of the beer and pub industry."

SIBA chairman Keith Bott slammed the Budget as “anti-beer and anti-pub.” He said: “This is not a Budget from a Government which claims, as does this one, to be supportive of pubs as places that encourage social cohesion and responsible alcohol consumption. Once again, we see a disconnect between what our policymakers say about beer and pubs and what they do – which is to impose further, punishing taxes on an industry that is already on its knees.”

Kate Nicholls, strategic affairs director of the Association of Licensed Multiple Retailers (ALMR), added: “The Chancellor today had a unique opportunity to send a clear signal that his Government was open for business and serious about job creation.

"That opportunity has been lost. Instead of a catalyst the Chancellor has effectively applied the brakes to investment, job creation and innovation in one of this country’s key economic drivers – licensed hospitality.”

Other trade bodies, MPs and brewers expressed their disappointment at the outcome of today’s budget for the British pub and brewing industries:

Greg Mullholland MP and chair of Save the Pub Group :
"Clearly the Save the Pub Group and I are very disappointed, but sadly not surprised, to get no good news on fairer beer duty. Despite vigorous campaigning and widespread support across the House of Commons for its abolition, the damaging and economically counterproductive beer duty escalator sadly remains in place.

We need to start the campaign for next year's budget now and the Save the Pub Group will continue to tell Ministers that pubs and publicans need lower beer duty to support them and allow them to encourage customers. It is also high time that the Treasury recognised that beer is our national drink. Despite this, it is not treated fairly in comparison to other drinks, or in comparison to its treatment in other EU countries.

"So we have much to do to get the message across but we must push the Government for action if they want to justify their claim to be a pro pub Government. So far people involved with beer and pubs are losing patience and it is time to turn words into action".

BII chief executive Peter Thomas:

“The news on the  beer escalator remaining unchanged and  the extra tax on amusement machines is disappointing,” said BII interim CEO Peter Thomas.  “Personal allowances and VAT on hot food sold in supermarkets are welcome but overall the budget misses the point that small and medium size businesses are under severe pressure . There is little immediate help to stop struggling pubs from closing.
The other disappointing omission is the lack of attention paid to the million young people out of work.

“Further support for apprenticeships, especially in licensed retail , and the opportunity to help employers take these individuals into work with a tax or national insurance holiday were grave errors .

We need to keep on reminding politicians that pubs can help and be part of the solution.”

Mark Hunter, chief executive of Molson Coors (UK & Ireland) and chairman of the BBPA:

“There are no winners from the beer duty escalator. Ordinary British drinkers are paying more tax to drink less beer, reducing overall government tax revenues and forcing British brewing into a deeper, duty-fuelled decline.

“The ‘escalator’ has lost all sense of proportion and logic – Beer drinkers in Britain already pay a whopping 40% of all European beer tax and yet drink only 13% of the beer - and we are disappointed that the government has chosen not to end this crippling policy.”

Nigel Wright, chief operating officer of managed pub group TCG:

“Customers in our local pubs in particular will feel the benefit of a few extra pounds in their pockets as a result of the increased personal tax allowance. The tragedy is that the feelgood factor is wiped out by the sharp increase in beer prices through the continuation of the Duty Escalator.

“We’ve worked hard over the past year to build cask beer sales in our pubs, supporting local brewers through the SIBA DDS scheme, as well as to increase the range of world beers we stock. Price increases are a real deterrent to going to the pub for a pint when customers are trying to balance the family budget.” 

Colin West, executive director of the Maltsters’ Association of Great Britain:

“The continuation of an increasingly high duty regime for beer is not good news for investment or employment in the UK malting industry and the wider beer supply chain. Maltsters are the link between brewers and barley farmers, and provide employment for hundreds while ensuring that British beer can be made from British ingredients.”
Ruth Evans, chief executive of the Brewing, Food & Beverage Industry Suppliers’ Association (BFBi):

“More than 40,000 UK taxpaying individuals are represented by our membership and their jobs depend upon the sustainability of the brewing and pub industry.   It is not only the 40,000 member employees who are affected by beer taxation within the Budget – their own supply chains are affected as well as the next supply chain.  In other words, practically every UK taxpayer in the country is affected by this issue.

 “However, beyond the issue of jobs, Government appears to have forgotten that the pub is often the heart of a community, where a large percentage of funds are raised for charities, sports facilities, and local services. Thus, taxation will affect the “Big Society”, something David Cameron has stated as a “Mission”.

 “BFBi asks Government to re-evaluate its policy on beer taxation in the Budget and apply a more construction, positive and sustainable  approach.”

Simon Johnson, chief executive of Business in Sport and Leisure (BISL):

"The Chancellor has rung last orders for many hundreds of community pubs the length and breadth of the country.  Pubs are at the heart of community life with some 27% of adults visiting their local once a week.

"They are also extremely important to the visitor economy ranking third in the list of reasons why tourists visit the UK.  If the Chancellor is serious about creating jobs, serious about supporting community assets and serious about promoting responsible drinking in regulated environments he would have scrapped the beer-duty escalator altogether.

"His failure to take action will result in a shift away from pubs, and simply stimulate unregulated alcohol consumption which we are all working hard to discourage."

Henry Chevallier, chair of the National Association of Cider Makers (NACM):

“Though not entirely unexpected this decision puts at risk the progress the industry has made in recent years to be more sustainable, to increase consumer choice, to address misuse and grow government revenues.

“The industry has just renewed its commitment to be even more sustainable and to invest in the rural areas where we are based and this move makes that much tougher. This comes at a time when consumers are already reducing their spending – the chance to enjoy a glass of cider just got more expensive.

“There is a budget deficit to address and that is understood.

“However, for an industry with an investment cycle measured in decades it is vital that we quickly return to a stable and sensible duty regime.

“Stability will ensure that the cider industry can continue to invest at a level that supports the rural economy and help improve the prospects for a very British success story – we don’t have that with this decision.”

Stefan Orlowski, managing director of Heineken:
"The Chancellor prefaced his speech today with a commitment to make this budget “unashamedly supportive of business” and “pro jobs”. It is therefore very disappointing that he couldn't have been more supportive of our nation's great beers, ciders and pubs."

 "By keeping the alcohol duty escalator in place for yet another year, the Chancellor has further increased duty by 5% per cent. This is a massive 42% per cent increase over the past four years, and is very bad news for the UK’s beer, cider and pub industries which support one million jobs across the country."

Tom Davies, Brakspear chief executive:

“Our Tax Free Beer campaign demonstrated that most consumers don’t understand just how much they pay in tax on every pint they buy – and are stunned when they find out. The increases on beer duty announced today, on top of already crippling levels, will drive more people out of pubs, leading to further closures and job losses.

“If Brakspear on its own can generate this level of support, imagine how much more could be achieved if other brewers and pub companies joined us by running similar campaigns? We’d certainly be able to raise the 100,000 signatures needed to force a debate on beer tax in the House of Commons, which would be a great result for pubs and pubgoers.

“Something has to be done: our industry simply cannot take much more punishment and survive.”

Benet Slay, CEO of Carlsberg UK:
"We are disappointed the government did not take the opportunity to freeze the duty escalator on beer and instead continue with a 10p increase on the price of a pint.  It suggests a lack of engagement and understanding of the important role the brewing and pub industry plays in the UK today.

WSTA Interim Chief Executive Gavin Partington:

"Today's Budget puts Britain on course for an Olympic record that gives no cause for celebration. Consumers and businesses are already paying the price for the excessive duty increases in recent years and today's news means more price rises are on the way.

"Whilst we recognise the pressure on the public finances, the mounting duty burden on the sector is holding it back from contributing fully to the UK's economic recovery."

Shepherd Neame chief executive Jonathan Neame:

“The Beer Duty Escalator is an economically illiterate policy that is inconsistent with other measures to develop a safer drinking culture in this country.

“The tourism and hospitality sectors are great sources of job creation, particularly for young people. The beer and pub industry employs one million people and are vital parts of the national and rural economy. Yet all these sectors are burdened by excessive taxation, and so investment and job opportunities are restricted.

“The Chancellor stated he cannot stand by policies which fail to raise revenue. However, since 2004 the tax on beer has increased by 54 per cent, resulting in a miserable 10 per cent increase in revenues for HM Treasury. Today our industry faces a further increase of 2 per cent above inflation, which will bring a £1.8 million tax burden upon our business alone.

“Approximately 40 per cent of the price of every pint goes to the Government. This is such a heavy burden that 8,600 pubs have closed in the last eight years.

“The country needs a policy framework that aligns economic needs with social and health objectives. The Government should realise that beer and pubs are part of the solution to a more responsible drinking culture in the UK, not part of the problem.

“Today’s announcement will drive people to drink stronger and cheaper alcohol at home and is an act of fiscal brutality on small, family-run, community businesses which undermines our social and cultural heritage.”

Kevin Georgel, managing director of Admiral Taverns:
“It’s extremely disappointing that the above-inflation duty escalator remains in place, given that it actually serves to reduce the tax take from alcohol.
“The government says it wants to encourage sensible alcohol consumption by driving people to the pub, which is a controlled environment, yet this policy is a tax on pubs.  

"It has clearly driven the acceleration of the gap in alcohol pricing between the on-trade and off-trade, so it’s strange that the government should persist with the escalator as a time when it is supposedly set to announce minimum pricing.”

Nick Otley, director of Otley Brewing Company:
“The fact that the Chancellor has maintained the alcohol duty escalator in this year’s Budget is very disappointing news. As a small craft brewery with two pubs, there is no chance we can absorb such an increase in duty so we will have no choice but to push up our prices.
“We kept our prices the same after the last rise in alcohol duty, but this time we will be forced to increase them to keep our business stable.
“Unfortunately, the average drinker will now be paying around 10p more for a pint of beer which, alongside the rising price of everyday living, is going to make for tougher times ahead.”

James Lousada, Commercial General Manager EU at Accolade Wines:

“We are disappointed at the Government’s decision to continue with the duty escalator, particularly as the increase in price will hit the pockets of the majority of responsible drinkers across the UK. The wine industry wants to play its part in the economic recovery but with the highest rate of wine duty in the EU, we are working with one hand tied behind our back.”

Duncan Lillie, director at leisure agents Shelley Sandzer:
“Despite the Chancellor saying duty on alcohol will remain ‘unchanged’ plans to increase alcohol duty to 2% above inflation annually until 2014/15 will go ahead.
“ The number of people who regularly drink in bars and pubs has decreased from 90% to 60% and that has been driven primarily by rising costs of alcohol; as well as competition from supermarkets and a fall in the number of people going out in tough economic times.  The Government’s drive to encourage people to have a more health conscious attitude towards alcohol has also had an impact.
“We recognise that the Government needs to keep a level head while looking out for people’s health, never the less the above inflation increase on alcohol means that jobs in the pub sector remain at risk and the sector doesn’t get the boost it needs.”

David Grant, managing director of Moorhouse's Brewery:

“I am extremely disappointed that the Chancellor has paid so little heed to the brewing and pub industry’s appeal for fairer tax and the scrapping of the insidious duty escalator.

"It was also frustrating to hear George Osborne single out several UK industries for special help – including Wallace and Gromit – while quickly skating over this swingeing stealth tax that the public is largely unaware of, until, of course, the price of a pint goes up yet again.

"Local brewing is one of the UK’s few manufacturing industries creating local jobs and wealth. We accept that duty has to be paid but it is the unfairness of the tax towards brewers that concerns me greatly.

“When I met the deputy Prime Minister I told him that last year one in six of 16-to-24-year-olds in employment were employed in pubs and breweries. He was amazed at that figure and the fact that 50 per cent of a brewer’s turnover goes in duty.

"The trade must continue to push these messages through with force. I was probably the last brewing person to have the ear of the Deputy PM before the Budget and I am optimistic that I made some impression for the longer term, despite yesterday’s rejection by the Chancellor.”

Related topics: Legislation, Beer

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