Scrap alcohol duty escalator to help pub survival

Published on 20/03/2013 00:33

I AM fully supportive of the fresh calls from brewers for the Chancellor to scrap the alcohol duty escalator in the Budget, the annual tax on beer at 2 per cent above the rate of inflation that represents a grave threat to the survival of the British pub.

Discouragingly, in its response to the brewers’ call for the escalator to be scrapped, the Westminster government has stated that the revenues from alcohol duty make an important contribution to tackling Britain’s debt crisis.

Maybe so, but the Treasury is mistaken if it thinks that retaining the escalator will help the government address the national deficit because it will only serve to place a further squeeze on the margins of many licensed trade premises and swell the ranks of the unemployed, so that the government would recoup less National Insurance and less tax revenue.

Consequently, the escalator could have the reverse effect to that intended by the Treasury and actually fuel Britain’s debt crisis further.

Perhaps in a buoyant economy the escalator makes economic sense, but in the present economic climate with widespread redundancies and public sector pay freezes, many people simply have less money in their pocket to afford to buy a round of drinks in the pub, particularly when they can still buy multipack cans of beer at a fraction of the price in any supermarket.

Indeed, it could be argued that, rather than the escalator being the primary threat to the survival of the British pub, it is in fact the ready availability of heavily discounted alcohol in our supermarkets that represents the main danger. With beer in the off-trade selling as cheaply as 50p a pint, the escalator effectively encourages consumers to buy cheaper alcohol from off licences and supermarkets.

That’s why I’m fully supportive of the Scottish Government’s plans to introduce a minimum price on alcohol sold in supermarkets; it’s cheap supermarket alcohol that is putting much of the licensed trade out of business.

The government should increase the price of alcohol in the off-trade as soon as practicably possible and scrap the escalator to stem the flow of pub closures and encourage employment, thereby helping cut our national deficit.

ROBERT KERR

• Robert Kerr is chairman of French Duncan Chartered Accountants.