Spring Budget 2021

Budget ‘does nothing for independent breweries’

By Nikkie Thatcher

- Last updated on GMT

Excluded areas: breweries and wet-led pubs won't benefit from the VAT reduction extension as it does not apply to alcohol (image: Getty/Odairson Antonello
Excluded areas: breweries and wet-led pubs won't benefit from the VAT reduction extension as it does not apply to alcohol (image: Getty/Odairson Antonello

Related tags: Beer, Brewing, Society of independent brewers, British beer & pub association, Molson coors

Plans outlined in the Chancellor’s Spring Budget, such as the VAT cut extension, will lead to further brewery closures according to one trade body.

“The Chancellor spent an extraordinary amount of taxpayers money to help keep the economy moving and jobs protected, pledging almost £59bn to policies including furlough extensions, continued business rates cuts, grants for hospitality of up to £9,000 and a series of investment initiatives," Society of Independent Brewers (SIBA) chief executive James Calder said.

“While this is helpful to the broad hospitality sector, it does nothing for the nation's struggling independent breweries, who desperately needed direct tax cuts and targeted grant support to help them survive until the economy reopens. What is the point in helping hospitality if there aren’t vibrant, diverse and local beers on offer when the economy re-opens? 
 
“As a result of the announcements more breweries are now more than likely than ever to close, just as there is light at the end of the tunnel," he continued. 

“Breweries and wet-led pubs will not benefit from the VAT cut extension as it does not apply to alcohol. Breweries will still be paying full business rates, VAT and duty and will not receive specific grant support – and while freezing beer duty is welcome, the Chancellor is still intending to increase the tax bill for at least 150 small breweries from next January with ruinous changes to small breweries’ relief, putting jobs and the recovery at risk.”

Disappointment to struggling breweries

Calder went on to outline how the recovery loan scheme, which takes forward Coronavirus Business Interruption Loan Scheme and Bounceback loans, will benefit breweries and many will take advantage, but will continue to saddle them with debt, rather than direct grant support, inhibiting growth and investment in the sector for years to come.

“Restart grants of up to £18,000 per hospitality business will help businesses plan, but once again, it doesn’t look like breweries are automatically included within the definition, therefore are at the mercy of discretionary grants," he added. "Different local authorities may grant one business support, one not. One may do this in weeks, others in months. 
 
“The ‘Super Deduction’ policy announcement, giving companies investing in qualifying new plant and machinery assets a 130% super-deduction capital allowance on their tax bills may be beneficial, but detail as to which taxes can be offset against is not yet published. 
 
“While this Budget will likely be celebrated by the broader hospitality sector, it comes as a disappointment to the nation's struggling small breweries and their supply chain, which have once again been de-prioritised by the Chancellor.”

Molson Coors Beverage Company managing director for Western Europe Phil Whitehead lauded the extension of the furlough scheme, additional grants, business rates relief and 5% VAT rate but highlighted how the beer duty freeze was short-term support.

“When we are finally able to enjoy a pint with friends in our favourite local, we will still be suffering the impact of a beer duty which is 11 times higher than in Spain and Germany and three times the EU average," he said.

“Introducing an alcohol duty system that levels the playing field for British brewers as part of the Alcohol Duty Review, as well as long-term reform of the business rates system, is an essential part of the longer-term structural support needed to give business owners, including brewers and pub operators of all sizes, the confidence and stability to invest for the future."

Level the playing field

British Beer & Pub Association boss Emma McClarkin echoed Whitehead’s comments on the alcohol tax freeze being a temporary relief.

“Having called for a cut in beer duty and being a staunch supporter of the Long Live The Local​ campaign, a beer duty freeze will be seen as much needed short-term relief for the sector," she said.

“However, the Chancellor has only partially listened to the 500,000 campaign supporters who signed the petition calling for a cut in beer duty. 

“We now hope the Government will use the ongoing Alcohol Duty Review to cut beer duty to support our brewers and pubs and level the playing field with other brewing nations. The Government must support and promote Britain’s extraordinary pub and brewing sector in the way other Government’s support their domestic industries.”

Related topics: Beer

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