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Last orders: Pub industry urges Government to cut beer tax ahead of budget 2012

By Luke Nicholls , 17-Feb-2012
Last updated the 17-Feb-2012 at 16:10 GMT

Related topics: Business, Venues, Legislation, Pub Trends, Pubs & Bars

As hospitality businesses are gearing up for next month’s announcement on the 2012 budget, the British beer and pub industry is unanimously demanding a freeze in the Government’s controversial beer tax escalator.

Brakspear chief executive Tom Davies with the £1.80 cost of a pint of beer on Tax-Free Beer Day (based on a £3.10 usual selling price)

Brakspear chief executive Tom Davies with the £1.80 cost of a pint of beer on Tax-Free Beer Day (based on a £3.10 usual selling price)

Leading industry bodies including the British Beer and Pub Association (BBPA), the Campaign for Real Ale (Camra) and The Society of Independent Brewers (SIBA) have individually written to Chancellor George Osborne, while a number of pub companies have frozen prices of beer to highlight the punitive effects that the tax rises are having.

"We are facing a further tax rise of over five per cent in the Budget – so action is needed now,” said Brigid Simmonds, the BBPA’s chief executive. “We need policies that support pubs, and to put an end to these totally unsustainable tax rises. We need a tax policy that creates vital jobs for young people, at a time when this should be the Government's top priority."

The BBPA’s written statement to Osborne highlights the ramifications that taxation can have on the beer and pub industries. It reads: “With beer accounting for seven out of every 10 pub drinks sold, huge tax rises in beer have been shutting Britain’s much loved locals and costing jobs.

“With real incomes falling and VAT having already added six pence to a pint, the escalator is long past its sell-by date.”

Camra

Camra’s letter to Osborne echoes these views, urging him to scrap the annual duty escalator which essentially requires beer duty to rise at two per cent above the RPI rate of inflation. Camra argues that duty has already risen by 35 per cent since 2008 and the imposition of the escalator could see beer tax rise by a further 7 per cent.

The campaign group is also calling on Government to consider further measures to help support the pub, including introducing a 50 per cent business rate relief, a reduced rate of duty for draught beer sold in pubs and a lower rate of VAT for food and drink served.

SIBA

SIBA has presented its budget submission to the Treasury, which first highlights the success of the Government’s investment in the local brewing sector through Small Breweries’ Relief, but also outlines the disastrous consequences of its disinvestment in the wider brewing and pub industries through its taxation of beer.

SIBA chairman Keith Bott said: “Once again, our submission to the Treasury points to the positive impact of SBR: local beer volumes are in growth and local brewers are investing to meet this growing demand, creating jobs and making a significant contribution to their local economy.

“However, the Government’s beer taxation policies will, if unchecked, undo all the good created by SBR. For local brewing to thrive, so must pubs: 82% of our members’ production is draught beer.”

Video: The effects of last year's budget

As a result of last year’s budget, which is said to have cost the pub industry ten thousand jobs in 2011 , BigHospitality spoke with a handful of operators to find out how the measure effected their businesses, with the following video.

In addition to the various submissions by industry bodies in the build-up to next month’s budget announcements, pub companies across the UK have launched a number of their own initiatives ahead of the budget:

  • Earlier this week, BigHospitality reported that Admiral Taverns has introduced a price freeze on a broad selection of its draught beers for licensees.
  • Frederick Robinsons, the Cheshire-based family brewers, has followed suit, freezing prices on the majority of the beers supplied to its 360-strong tenanted estate.
  • Ten Brakspear pubs in Henley-on-Thames are to stage a Tax-Free Beer Day on Tuesday 28th February, while encouraging the town’s drinkers to sign a petition calling for a more pub-friendly tax regime (pictured).

Stay tuned to BigHospitality for the hospitality industry’s reaction to next month’s budget, which will be available to download as a podcast.

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