Budget 2017: six things for pubs to look out for

By Georgina Townshend

- Last updated on GMT

Budget 2017: Hammond will announce plans on Wednesday (8 March)
Budget 2017: Hammond will announce plans on Wednesday (8 March)

Related tags: Business rates, Alcoholic beverage

Concerns about rises in business rates and the potential fallout of Brexit means pubs up and down the country are hoping chancellor Phillip Hammond will offer them some financial respite in the budget on 8 March.

Last year George Osborne froze duty on beer, cider and spirits – but raised it on wine - and delivered a permanent small business rates relief to those with rateable values up to £15,000.

However, the current chancellor has already said there would be “no spending sprees” indicating he is not in a position to be as generous as his predecessor. The Morning Advertiser highlights the things to look out for tomorrow.

Business rates relief

Widespread concern about the impact of business rates revaluation make it a strong possibility that the government will try to offer the private sector some monetary succor in the form of rates relief.

From April 2017 business rates will change following the first rates revaluation since 2010. When the changes were outlined by Osborne in the last budget, he suggested that around 75% of pubs would benefit from changes to business rates, with a pub on a rateable value of £50,000 saving £625 per year from April 2017.

However, since then doubt has been cast on exactly how many pubs will benefit from the changes, prompting communities minister Sajid Javid to tell parliament he is working with the chancellor “to determine how best to provide further support to businesses facing the steepest increases”.

Ahead of the budget he British Beer & Pub Association (BBPA) has redoubled its call for a scheme of relief specific for pubs.

However, details on the extent of transitional rates relief that could be unveiled remains sketchy. Even industry bodies campaigning for relief have been vague about what they’d like to see.

Beer tax hike

Last year duty on beer and cider was frozen but the BBPA has warned that the 2017 budget could bring in duty increases for both.

This week the industry body issued a “final warning” that any return to beer tax hikes would be a major setback for brewers and pubs and could mean the loss of thousands of jobs.

“Our beer taxes are already three times the EU average, and pubs face big new cost challenges this year,” said BBPA chief executive, Brigid Simmonds.

“Any return to tax hikes would be a massive setback for the industry and the 900,000 people we employ.

“Instead, by continuing the sensible tax policy begun in 2013, the chancellor can create confidence in this important sector, and bring cheer to pubgoers – and all at virtually no cost to the treasury.”

Tax on wine

In the 2015 and 2016 budgets, wine was the only drinks product not to receive a 2% drop.

The Wine and Spirit Trade Association (WSTA) has argued a cut to beer duty in this month’s budget would be a “job half done”​ due to the “importance of wine and spirits to the pub industry”.

Miles Beale, WSTA chief executive, said: “Wine and spirits are ever more important to the British pub, and the chancellor can do his bit to support them and landlords by cutting wine and spirits by 2%”.

However, the BBPA has dismissed the WSTA’s call, and said a cut in beer duty remained “the most effective option”.

Help to mitigate the impacts of Brexit

Last month ALMR revealed discussions with the government about increasing support for organsiation that will be hit by rising costs after Brexit are “progressing well”, after chief executive Kate Nicholls met with Brexit ministers.

Nicholls said she believes there is an “appetite” within government to find a solution to avoid a “cliff edge” fall in pub employment post-Brexit.

BBPA’s Simmonds has also been positive about the UK leaving the EU, and said although negotiations will be needed to protect overseas staff, there are “potential opportunities”, especially in the exports category.

Sugar levy

Many pub operators have rejected claims the potential introduction of a sugar tax, which could add as much as 30p to the price of a soft drink, would put customers off buying from purchasing this category of beverage.

But the ALMR’s Nicholls said that pubs will be the ones who will face the effects of “any price rise”.

The Office of Budget Responsibility has predicted 18p to 24p could be added to the price of a litre of fizzy drink, with a total of £520m expected to be raised in the tax’s first year.
Sugary drinks will be taxed in two bands: one for drinks with more than 5g of sugar per 100ml and one for drinks with more than 8g per 100ml.

Smoking ban u-turn

It will be 10 years in July since the smoking ban was introduced in England. And many would say it has been very successful despite causing huge controversy within the pubs sector at the time.

The ban has been widely embraced by the public as many in the UK are aiming to live a healthier life.  But with many pubs looking for support, you never know what the chancellor might pull out of his red box on Wednesday.

Related topics: Legislation

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