Budget 2011: The pub industry’s reaction

That’s the message from the British Beer and Pub Association, which sees the 7.5 per cent tax increase announced in today’s budget by Chancellor George Osborne as a “hammer blow to pubs and pubgoers.”

“This policy hampers growth and damages pubs and the communities which rely on them,” said BBPA chief executive Brigid Simmonds. “The fight to end this damaging policy continues.”

Today’s budget decisions have also “baffled” several pub companies and brewers.

Lose, lose situation​

Molson Coors claims the Treasury’s continued “persecution” of beer and pubs will not help the government toward its emerging framework around alcohol responsibility and culture of moderation.

Mark Hunter, chief executive of Molson Coors (UK & Ireland), said: “Where is the common good in taxing one of life’s simple pleasures – sharing a beer with friends – out of existence? The treasury loses, brewing loses, pubs close.

“The archaic gulf between low level cider tax and the high rates endured by beer drinkers gets wider with every hack of the duty escalator while higher strength drinks enjoy one of the most lenient tax environments, relative to beer, in the world.

“Today, yet another opportunity has been missed to overhaul Britain’s outdated tax system by closing the 100 per cent gap between beer and cider tax rates and to re-instate a sensible, meaningful tax ratio between low and high strength drinks, as exists across the majority of Europe.”

“Unfair”​

Diageo claims that over 70 per cent of the retail price of a bottle of its Gordon’s Gin or Bell’s Whisky, both of which have a 40 per cent abv, now consists of tax.

“That is a staggering and unsustainable figure which is significantly higher than the equivalent tax proportion on an average litre price of unleaded fuel,” a spokesperson for the company said.

“This is a real kick in the teeth to the local brewing sector, one of the few British success stories of recent years,” added SIBA chairman Keith Bott. “Local brewers are just the kind of business this government says it wants to see prosper: they create jobs for local people and contribute to the local and wider British economy by using home-grown ingredients. Yet the current beer taxation regime is killing off our main route to market – the British pub.”

However many welcomed the move to reduce the duty on beers below 2.8 per cent abv, despite the legislation applying to less than 0.5 per cent of all beer.

“It will act as a spur to innovation in what is a vital UK industry, and over time, should help nudge consumers towards lower-strength drinks,” added Simmonds. “The next step is to move towards a zero rate and, as importantly, for the Government to support a change in European law to increase the 2.8 per cent abv threshold to which reduced rates can be applied.”