After months of campaigning from leading voices across the brewing and hospitality sectors the Autumn Budget was unveiled yesterday with Chancellor Hammond seemingly heeding requests to relieve some of the pressures felt throughout the trade. Following an unexpected and challenging Spring Budget, which saw increases in both Beer Tax and Business Rates, a number of organisations came together to form a cross-industry coalition urging the government to reconsider the crippling regulations.
These organisations included; the British Pub & Bar Association, CAMRA, the Association of Licensed Multiple Retailers, the British Institute of Innkeeping, the Society of Independent Brewers, Maltsters Association of Great Britain, Pub is the Hub, and the British Hop Association. Writing to the Chancellor back in October after a well-publicised campaign, the group highlighted the impacts of the substantial taxes imposed upon the industries despite their considerable contributions to both the economy and society.
So, what were the main points of the campaign?
- Pubs are paying five times more in business rates than their share of rateable business turnover, and while the rate relief of £1,000 for the 2017/18 year is welcomed, it does not change the disproportionate levels of expected increases in future.
- The massive 39% rise in beer duty over the past decade, including 4% in March this year, a burden felt by not only pubs but also consumers, particularly those on lower incomes.
- Pubs and brewing support 900,000 jobs throughout the UK and contribute £23 billion to the economy – with £1 in every £3 spent in pubs going to the Exchequer.
- 80% of beer consumed in the UK is brewed here meaning a competitive tax environment is essential, however for brewers up to half their turnover is excise duty.
- The important role pubs play in communities, particularly now during a time of economic uncertainty and divisions in society.
What measures did campaigners request the Government take?
- Extend and increase pub-specific rates relief beyond this year and set out major reform of the system.
- Implement at least a freeze in Beer Duty for the duration of Parliament.
What has the Chancellor offered?
- A freeze on all alcohol duty.
- 1-year extension of the £1000 business rate relief for pubs valued under £100,000.
- More frequent business rate evaluations – every 3 years and an early switch from Retail Prices Index to Consumer Prices Index.
What does this mean for pubs?
- The freeze on alcohol duty means that beer, wine and spirit tax will no longer rise with inflation, as was originally intended. This is only the second time that a freeze on wine has been implemented in 15 years. It is estimated that altogether this will save pub-goers £117 million this year and in subsequent years.
- Of course, this will have a knock-on effect in the employment areas of these sectors. From the production of the goods right to the point of service – it is claimed that the proposal will save at 3000 jobs that would have otherwise been lost.
- A 1-year extension of the £1000 business rate relief carries the reduction through to 2019, with pubs feeling benefits to the tune of £25 million.
- The early introduction of the switch from RPI to CPI (2 years ahead of schedule) and the more frequent evaluation of business rates will generate the industry savings of £37 million in this year alone.
(Estimates of annual savings courtesy of the BBPA)
What more needs to be done?
- The alcohol duty freeze is not committed across the entire Parliament and still leaves the UK paying 3x more than our EU counterparts. The BBPA had lobbied for a 1% reduction.
- The relief rate extension is only for one more year and does not apply to pubs with a rateable value over £100,000. This means that pubs paying the highest rates in the business are not entitled to any immediate assistance.
- Pubs are still facing a huge rise in rates in the coming years regardless of yesterday’s announcements, thus furthering the case for a complete overhaul of the system to address the potentially devastating long-term effects it presents. Without this, the amendments offered by the Chancellor will be seen by many as simply a band-aid for a bullet wound.
Overall, yesterday’s announcements have been a short-term step in the right direction and it would appear that the government could be starting to listen to the concerns put forward by campaigners. But the feeling remains that there is still much to be done if the Government truly recognises and wishes to maintain the vital role that the great British pub plays in our society. The fight is far from over!