Big pub chains must pass on cut in duty

The beer duty escalator was scrapped in 2013. Picture: PA
The beer duty escalator was scrapped in 2013. Picture: PA
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PUBS saved, thousands of jobs created and millions more pints poured – that’s worth raising a glass to, says Colin Valentine.

Something strange happened in the Budget in 2013. Whilst the scrapping of the beer duty escalator (the introduction of which was, surely, the most deliberate attempt to kick an industry when it was down seen in recent years) was not unexpected and something that Camra, pub owners, brewery owners and ordinary drinkers had worked extremely hard on for over a year, the Chancellor also dropped beer duty by a penny.

This was a great, if very pleasant, surprise as it was the first time in living memory that beer duty had been reduced – 1959 being the last time. In 2014, we campaigned for a freeze and were, once more, surprised at yet another penny coming off beer duty. A hat trick was achieved in this year’s Budget, on 18 March, when it came down by yet another penny.

Many people complained that, even as beer duty was going down, beer prices were still rising and no-one was feeling the benefit. While Camra knew that this was not the case in reality, there was no hard evidence to back up our contention.

For that reason, we commissioned research from the Centre for Economic and Business Research to examine the effects of the scrapping of the beer duty escalator and the subsequent duty reductions. The results surprised us – not only would a pint be more expensive than it currently is, as we all knew anyway, but investment in the brewing sector increased, millions of extra pints were bought, pubs remained open that would otherwise have closed and many thousands of jobs were created.

Scrapping the beer duty escalator means that a pint is at least 5 per cent cheaper than it would have been if it had remained in place, £60 million of extra investment would simply not have happened, more than 1,000 pubs have remained open that would otherwise have closed and more than 25,000 additional jobs have been created.

This is all in addition to the tens of millions of extra pints that have been consumed over the past year, meaning that beer production in the United Kingdom is now in growth for the first time in a decade, which clearly shows that abolishing the escalator and reducing beer duty has been hugely successful in generating economic growth and jobs.

It must also be added, despite the references in the media to the cost to the Exchequer of lowering beer duty, that the net effect is, at worst, cost neutral, and businesses have stayed open, many have invested in both plant and personnel, and this, in turn, has led to higher tax receipts through income tax, value added tax and corporation tax.

This is because, despite the popularity of world beers, more than 90 per cent of the beer consumed in this country is brewed in this country – and how many other industries can claim such a domestic market dominance.

With the cut in cider and spirits duty as well, this should be a real benefit to the pub sector which, don’t forget, employs hundreds of thousands of people in the United Kingdom, many, if not most, of whom are under 25. With this age group being hit hardest during the economic downturn over the past seven or eight years, surely this is a cause for celebration.

It is now time for us all to celebrate what the pub brings to community life in this country – a place to enjoy alcohol responsibly in a welcoming and controlled environment where, if you have one too many, the licensee will tell you that you have had enough and send you home with the reminder that you will be welcome back the next day, rather than drinking yourself into oblivion on cheap supermarket hooch on a park bench or slumped in front of the television.

The large pub-owning companies, who were quick to pass on duty increases to their customers, often piggy-backing a general price increase along with it, must also play their part in this nascent renaissance. They must stick to their promise to pass on any duty savings to their customers and not pocket the difference, as has been seen recently by the owners of well-known brands who have kept the price the same, but decreased the size of the product.

• Colin Valentine is national chairman of the Campaign for Real Ale

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