Jeremy Hunt’s plan to freeze draught beer duty received a mixed reaction from the pub industry today, with Wetherspoon boss Tim Martin welcoming the move but one landlady dismissing it as a ‘velvet-gloved punch’.
Amid sweeping changes to the way alcohol is taxed announced in his Budget, the Chancellor said the levy charged on draught beer and cider would not rise in line with inflation in August. Instead, a pub-pulled pint would have 11p less duty on it than shop-bought alcohol.
Mr Hunt said the move was part of the ‘Brexit pubs guarantee’ which ensures ‘pubs will always pay less tax on a pint compared to supermarkets’.
Mr Martin praised the duty freeze but insisted more needs to be done to close the gap in tax on pubs versus supermarkets.
‘Any reduction in the tax disparity between pubs and supermarkets is welcome,’ he said. ‘We have been campaigning for tax equality for a long time. This gesture by the government is a tacit acknowledgement that something needs to be done.’
Tim Martin, chairman of JD Wetherspoon, welcomed the freezing of draught beer duty, but insisted more needs to be done to close the gap in tax on pubs versus supermarkets
British Beer and Pub Association chief executive Emma McClarkin said Mr Hunt’s announcement was ‘positive’
Mr Martin added: ‘We will investigate how much of the tax disparity remains after this move. We retain our view that anything less than equality is an unsustainable distortion and is economically counterproductive.’
Nick Mackenzie, chief executive of Greene King, said the measure would only provide partial relief for landlords, who face a spike in their energy bills when an existing programme of government support ends in April.
‘We are pleased to see that the Chancellor has listened to the pub industry and increased the relief on draught beer, an important step to support the Great British Pub,’ he said.
‘However, the devil is in the detail, and we are concerned that the extended draught relief will still not mitigate the challenging headwinds UK pubs face.’
Mr Mackenzie added: ‘With duty primarily paid by suppliers, such as breweries, it’s essential that any benefit is passed through to venues to help deliver the Government’s objective of reducing inflation and growing the economy.’
Under an EU Directive from 1992, varying duties on beer could only be applied on the basis of alcoholic strength, and not on where it is sold.
In his speech yesterday, the former Remainer, Mr Hunt presented his announcement as a Brexit dividend.
‘I will do something that was not possible when we were in the EU and significantly increase the generosity of Draught Relief,’ he said.
Nick Mackenzie, chief executive of Greene King, said the decision to freeze beer duty would only provide partial relief for landlords
Dawn Hopkins, vice chair of the Campaign for Pubs and a landlady, questioned whether the Government was serious about helping pubs
Mr Hunt told MPs the change to beer tax would also apply to ‘every pub in Northern Ireland’ due to the Windsor Framework unveiled by Rishi Sunak more than two weeks ago, but yet to be passed by MPs.
He added: ‘British ale may be warm, but the duty on a pint is frozen.’
The favourable tax treatment for draught beer was described as ‘welcome’ by the Campaign for Real Ale.
But Mr Hunt’s announcement was described as a ‘velvet gloved punch’ by the Campaign for Pubs – which also hit out at the Chancellor’s ‘crass’ reference to traditional ales as being served ‘warm’.
‘If the Government were serious about supporting pubs and hospitality, they would have kept this support, cut VAT and finally announced the long-awaited overhaul to the business rates system they have promised again and again,’ said its Vice Chair, Dawn Hopkins.
‘The crass comment about warm beer shows that Jeremy Hunt doesn’t go to the pub and he certainly doesn’t understand the serious situation pubs, publicans and small brewers are in.
‘We will lose even more of our nation’s pubs and small breweries if this Government continues to ignore calls for targeted support.’
A move to tax drinks according to their alcohol content – the stronger the beverage the higher the levy – means millions of drinkers face seeing the price of red and whites rise by 20 per cent – or 44p per bottle- according to the Wine and Spirits Trade Association
Other critics pointed to wider tax changes that will affect the cost of a bottle of wine and spirits.
A move to tax drinks according to its alcohol content – the stronger the beverage the higher the levy – means millions of drinkers face seeing the price of red and whites rise by 20 per cent.
This will add an average of 44p per bottle, according to the Wine and Spirits Trade Association – representing the largest rise in half a century in the tax on a bottle of red or white.
Also, across the board, tax on alcohol will rise with inflation – 10.1 per cent – on August 1.
Together, these measures were criticised as a ‘double-pronged tax raid’ on drinkers.
British Beer and Pub Association chief executive Emma McClarkin said: ‘The cut to draught duty as part of the alcohol duty reform is positive and we hope that it will result in a boost for our pubs this summer.
‘However, the fact is our industry will be facing an overall tax hike, not a reduction, come August.’
In his speech yesterday, the former Remainer, Mr Hunt presented his announcement as a Brexit dividend
Miles Beale, chief executive of the Wine and Spirit Trade Association, added: ‘The Government’s decision to punish wine businesses and consumers with a 10 per cent duty hike for spirits and a massive 20 per cent for wine, from 1 August, is staggering. It is the largest increase in wine duty since 1975.
‘This Budget directly contradicts what this Government claims it is trying to tackle. It will further fuel inflation. It will heap more misery on consumers.’
Nuno Teles, of Diageo, the makers of Johnnie Walker whisky, said the ‘decision is a hammer blow… We urge the Chancellor to reverse this punitive and inflationary tax hike’.
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