Budget freeze on beer duty is a must

Any increase in duty now would undo all the good which has come from last year’s cut, says Colin Valentine

As George Osborne prepares to deliver the budget, CAMRA is pressing for a freeze on beer duty. Picture: Getty

LAST year’s cut in beer duty was the first in over 50 years and a monumental step forward for the industry. Not only was the hated Beer Duty Escalator finally scrapped – which added 2 per cent above inflation to the tax on beer year on year – but a further penny was actually knocked off the duty on a pint.

In real terms it meant that rather than a pint going up by around 10p across the board, it actually stayed the same, as the Chancellor insisted the saving was passed on to drinkers. It was a real shot in the arm for the industry and a vote of confidence from the Westminster government.

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In the weeks following the 2013 budget there was a distinct air of positivity about pubs and the pub industry, something which certainly rubbed off on punters – with research conducted by Barclaycard finding that spending in pubs on credit and debit cards following the cut was boosted by 4 per cent.

It might not sound like much, but in an industry which has been in overall decline – although I should add real ale is outperforming the rest of the beer market – it is these small steps which are important. A penny cut in beer duty caused a 4 per cent increase in pub sales, so imagine what something more dramatic could do?

As well as the increase in spending in pubs, a report produced by the Campaign for Real Ale (CAMRA), the British Beer and Pub Association (BBPA) and the Society for Independent Brewers (SIBA) showed that the duty cut could have a dramatic long-term effect on employment within the pub sector, with an additional 10,000 jobs expected to be created by 2015-16.

However, it is absolutely clear much more needs to be done, with the latest independent research by CGA, covering the period of April-December 2013, showing that three pubs a week are still closing in Scotland.

Granted there are other forces at work here – cheap supermarket alcohol, the selling off of valued community pubs for development into convenience stores, and the broken tied pub system being the main culprits – but beer duty is a key factor when it comes to the success of the industry, and is something the Westminster government have direct control over.

As such, looking towards this year’s Budget, CAMRA has a very simple and important aim – to get a freeze in beer duty to help this industry continue on its road to recovery. Any increase in beer duty would now surely undo all the good which has come from last year’s cut and get the industry off on the wrong foot, before what will hopefully be a busy summer for the trade.

Thousands of CAMRA members have already contacted their MP to call for beer duty to be frozen in this year’s Budget which, considering the UK pays the second highest rate of beer duty in the European Union, is really not too much to ask for.

It may sound obvious, but beer is by far the biggest income stream for the average wet-led pub, it’s their lifeblood, accounting for seven out of ten drinks sold in UK pubs. An increase in beer duty has a direct affect on how much a pub has to charge customers for beer, and as a result how many people will buy a pint or visit the pub. As we’ve seen by the research mentioned above, a cut in beer duty can have the opposite effect.

So let’s make this crystal clear: anything but a freeze in beer duty in this year’s Budget would be disastrous for the industry and have the potential to undermine all the other positive steps being taken by the industry.

It’s vital we build on what we have achieved – not take one step forwards, then two steps back, from one Budget to the next.

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