Autumn Budget 2021

Duty freeze and further cuts are 'bold and far reaching'

By Gary Lloyd contact

- Last updated on GMT

Government move praised: Hogs Back Brewery owner Rupert Thompson
Government move praised: Hogs Back Brewery owner Rupert Thompson

Related tags: Budget, Beer, Legislation, Wine, Spirits, Lager

Sector bosses have hailed the Government’s decision to scrap planned duty increases to alcoholic drinks and introduce a Draught Relief scheme to further reduce duty as “bold and far reaching”.

Hogs Back Brewery owner Rupert Thompson said: “We are very supportive of the Chancellor’s announcements on duty which are bold, far reaching and demonstrate a good understanding of why it’s important to avoid damaging, tax-driven market distortions.

The Farnham-based beer producer continued: “The new Draught Relief, freeze to the planned increase on beer duty, and the business rates discount, are very much welcomed, and show the Government recognises the special role pubs play at the heart of our communities, and the very heavy costs that they bear. However, anomalies on VAT charged on food in pubs versus supermarkets remain a long-term problem.

“We applaud the move to simplify the duty system, which promises to be much fairer. With smaller cider makers now set to benefit from duty relief on ciders under 8.5% ABV, we support wide consultation and learning from the review of Small Brewers’ Relief. It is important to avoid the unintended anomalies that caused many problems for mid-sized brewers and constrained normal market growth.

“Overall, this is a good Budget for British pubs and British brewers. We will be raising a glass to the Chancellor and once all the details of duty reform are sorted out we may even brew him a special celebratory no-alcohol pint.”

Trade body UKHospitality also praised Chancellor Rishi Sunak’s Budget announcement yesterday​, and said: “The Chancellor’s announcements simplifying – and in many cases reducing – alcohol duties, are great news for pubs, bars and restaurants, and will benefit all. The Chancellor has shown real innovation and creativity in reforming an archaic system of duty, which we applaud.”

Fellow trade organisation the British Beer & Pub Association welcomed the duty freeze and future initiative but warned the duty rate in the UK remains among the highest in Europe. Chief executive Emma McClarkin said: “Pubs, brewers and beer drinkers will be toasting the Chancellor for a range of business-boosting measures. 

“The Chancellor’s decision to freeze beer duty instead of the RPI-linked increase he had planned is to be warmly welcomed. It will save £177m and secure 9,000 vital jobs across the country. Clearly, the Chancellor listened to the 134,000 people who signed the Long Live The Local​​ petition calling on him to support pubs and brewers in the Budget.

“Pubgoers will also be toasting the Chancellor today for announcing a 5% lower duty rate on draught beer worth £62m. This is great news for our local pubs and recognises the crucial role they play in our economy and society. However, the overall beer duty rate in the UK remains among the highest in Europe. It is vital for Britain’s brewers, a world class homegrown manufacturing success story, that the overall beer duty burden is reduced – not just duty on draught beer in pubs. 

“Beer is a low-strength product and breweries have invested heavily in developing a range of innovative, exciting and great tasting low and no alcohol beers. We, therefore, welcome proposals to reduce duty on lower-strength products as part of the proposed modernisation of the alcohol duty regime to better incentivise the consumption of lower-strength drinks.   

“Overall, this has been a good Budget for pubs as they recover from the pandemic. The measures announced today will help pubs and breweries play a leading role in levelling up the economy and building stronger, more vibrant communities throughout the country.” 

Importance of sector recognised

Night-time economy adviser for Greater Manchester Sacha Lord added: “Finally, the Chancellor has recognised the strength and importance of the hospitality sector. I am pleased to see the much-needed business rate discount and the introduction of tax reforms on alcohol, both of which will go far in helping hospitality operators, especially wet-led pubs, maintain a steadier footing while they recover.”

Brewing outfit, the Society of Independent Brewers (SIBA), also said questions remain for small independent brewers but saw the positives from Sunak’s announcement. SIBA chief executive James Calder said: “The Chancellor’s Budget introduced radical changes to the outdated alcohol duty system, which will benefit brewers of lower strength beers, traditional cask beer and create a more level playing field between small breweries and cider producers. 

“The lower rate of duty for beer sold in pubs is a huge win for the industry and something SIBA has been campaigning for. We look forward to working with the Treasury as it implements this landmark policy.

“While hugely beneficial for producers of real ale, which is sold in 40-litre casks, most craft keg beer in the UK is sold in 30-litre kegs, meaning they cannot benefit. By amending this lower threshold to 20 litres, the Treasury can ensure all independent breweries benefit from this welcome new duty relief on draught beer. 

“Furthermore, the freeze in beer duty is very helpful at a time when brewers are seeing a myriad of other supply and running costs rising.

“The new Small Producer Relief scheme builds on the hugely successful Small Brewers’ Relief scheme (SBR) and we will continue to work constructively with the Treasury to implement positive reform of SBR that does not see small independent breweries worse off.”

The Campaign for Real Ale (CAMRA) was delighted with the announcements by Sunak. On the subject of the new Draught Relief that will see a further duty cut of 5% implemented in February 2023, CAMRA chair Nik Antona said: “The introduction of a draught duty rate is a game-changer for cask beer drinkers, cider and perry drinkers and the great British local. 

“This is something CAMRA has campaigned on for many years and we are delighted the Government has listened, supported our locals and introduced the important principle that beer, cider and perry served in a pub or social club should be taxed at a different rate to alcohol bought at places like supermarkets. 

“CAMRA has previously commissioned research that showed that a draught beer duty rate could pull consumption into pubs and social clubs from the off trade, providing a boost to pubs and local economies. We hope pubs and producers will make sure drinkers see the impact of this revolutionary policy on the price of their pints, to encourage them to return to their locals.  

“We look forward to campaigning for future reductions in draught duty, to make sure that consumers, brewers and publicans can enjoy the maximum benefits of this ground-breaking new policy.” 

Huge relief for wine and spirits sector

The duty freezes and cuts will help continue the economic recovery of the hospitality sector said Night Time Industries Association (NTIA) chief executive Michael Kill. He said: “The announcements on business rates relief for hospitality, the simplification of alcohol duties, and the cut in duty for draught beverages will be welcomed by thousands of businesses in the night-time economy.”

Beer was not the only beneficiary in the Government’s Budget announcements, wine and spirits were also included. Miles Beale, chief executive of the Wine & Spirit Trade Association (WSTA), said: “The decision to freeze wine and spirit duty comes as a huge relief to British businesses, the hospitality sector – including its supply chain – and consumers, giving everyone a much-needed break to help them recover from the pandemic.

“Chancellor Rishi Sunak should be commended for listening to our calls for support and understanding that punishing tax hikes are not the best way to reinvigorate the sector. 

“By offering continued respite to the UK wine and spirit sector his actions will help save jobs and – in time – replenish revenues to the Treasury through growth in our potential-filled sector.

“We welcome the reduction of the sparkling wine super tax, which is long overdue. We look forward to seeing the detail of a new system which should remove the existing unfairness of how different products are treated.”

It wasn’t only trade bodies with positive messages for Sunak. Brewing giant Heineken UK said: “Cheers Chancellor. The Chancellor has once again shown he’s a man of the people by helping to support the great British pub, and making sure that lower strength drinks such as cider and beer, which rely so heavily on British agriculture, are protected for the long-term. 

“We welcome the freeze on alcohol duties and we are going through the fine detail of the duty consultation. Any reduction on cider and beer duties directly helps the 45,000 pubs that are still suffering the effects of the pandemic – and the many thousands of people who rely on these industries across the UK.”

Wine producer Chapel Down explained English wine is a 21st-century success story, and the fact sparkling wines benefited in the Autumn Budget was not lost on chief executive Andrew Carter, who said: “It’s very encouraging to see the support and recognition of the industry’s success at a governmental level, which is the best endorsement we could hope for.

“The duty saved will enable the industry to create jobs, support families and bring even more young talent into this exciting, developing sector as it recovers from the pandemic.

“The Chancellor’s patronage will make us more competitive against our worldwide competitors and this change will enable us to reinvest in our business and to continue growing at pace.”

Related topics: Legislation

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