BBPA: 'trade is victim of stealth tax'

BBPA promises thorough examination of industry lobbying tactics as trade comes round to the full reality of the Budget's impact on pubs

Trade leaders have refused to blame their lobbying tactics in the wake of one of the biggest ever tax hikes to be heaped on the industry by the Chancellor in last week's Budget.

Lobbyists said Treasury ministers got a crystal-clear message about the mounting problems heaping up on pubs and the UK's declining beer market. But they claimed the huge excise-duty rises showed the Government was not prepared to listen to the trade's case.

The duty increases saw 4p slapped onto a pint of beer, 3p on a litre of cider, 15p on a bottle of wine and 55p on a bottle of spirits.

The British Beer & Pub Association (BBPA), one of the main lobby groups, said the trade was a victim of a classic stealth tax. Communications director Mark Hastings blamed the rises on a Government desperate to stabilise the country's flagging economy.

"Their failure to manage the economy meant they had to find extra money from somewhere and they have selected our industry as an easy target. The conclusion to be reached is that alcohol is seen as an easy way of raising revenue by a Government desperately short of money," he said.

The BBPA has promised a "microscopic" examination of how the industry carried out its lobbying and whether there were lessons to be learnt. "We will be studying whether there are any parallels with other sectors of industry and how they conducted their discussions with the Treasury," Hastings added.

BBPA chief executive Rob Hayward said: "We will be meeting with the other alcohol organisations shortly for an urgent review. We've also got to take our arguments to Parliament when it discusses the Finance Bill. We all feel shafted, and I know a lot of companies have written to their MPs to complain about the Budget."

The association said there were major challenges ahead following the announcement that duty will rise 2% above the inflation rate annually for the next four years. It hopes to build a broad coalition to take forward the views of the trade and the public over what are seen as swingeing increases in alcohol tax.

trade ponders price increases

Drinkers are being confronted by a bewildering array of different price increases as licensees and pub operators react to the Budget changes. Rises range from a basic 5p a pint (4p duty plus VAT) to as much as 20p, as hosts combine recent wholesale beer rises and the duty hike with adjustments to their own margins.

Many managed operators will charge customers the basic 5p although one company, Manchester-based JW Lees, has decided to absorb the VAT element of the increase and has urged its tenants to do the same. The Laurel Pub Company this week imposed a flat-rate 10p rise on beer, lager, cider and spirits. The company said the increase includes a previous brewery rise that it did not pass onto its pubs. "We were fairly sure we were going to get clobbered in the Budget and we were not wrong," said chief executive Ian Payne.

One small brewer and pub operator, Nottingham-based Castle Rock, will also absorb all the Budget increases in its 20 venues. Managing director Chris Holmes said he wanted to ensure drinkers still visited his outlets. Greene King and Brains have both passed on the basic 5p increase across their managed estates. Punch said it would be passing on increases to its Spirit managed estate on a pub-by-pub basis "appropriate to the local market". Wholesale Budget price increases will be passed on in full to its lessees.

Enterprise Inns lessee Anita Adams said prices at her Golden Slipper pub in York would rise a minimum of 10p and could go up by as much as 20p. "We have not done our final calculations, but we always aimed to do one single increase after the Budget was announced," she said. Host Matt Jackson, who runs freehouses in Lancaster and Barrow-in-Furness, predicted increases of 15p a pint. "We have held back until after the Budget," he said.

industry leaders speak out

Nick Bish

Chief executive

Association of Licensed Multiple Retailers

"The Government has failed to distinguish between the vast majority of responsible operators and consumers and the irresponsible minority.

"The Budget failed to address the crucial issue of below-cost selling by major supermarkets, which, unlike pubs, can afford to absorb some of the duty increases.

"Closed pubs cannot pay taxes, only open pubs can. The Government had already created a climate in which pub closures were running at record levels and this Budget will make a bad problem much, much worse."

Nigel McNally

Managing director

Wells & Young's

"The Treasury has completely missed the point. The 4p increase is a kick in the teeth for companies like Wells & Young's, which promotes responsible drinking.

"The Chancellor had the opportunity to put his mark firmly on promoting safer drinking and curbing the decline of the beer market.

"Millions of people drink in pubs across the country and increasing the price of a pint could backfire on the Treasury and reduce revenue from the industry."

Mike Benner

Chief executive

Campaign For Real Ale

"The Chancellor has failed to realise that well-run community pubs are the solution to Britain's binge-drinking problems.

"This Budget will do nothing to stop binge drinking, but it will lead to pub closures on a huge scale, widen the gap between supermarket and pub prices, and encourage smuggling and cross-border shopping.

"It's a great big nail whacked ruthlessly into the coffin of the British pub."

Giles Thorley

Chief executive

Punch Taverns

"I am disappointed the Government does not recognise the important and beneficial part that pubs and traditional brewers play in the British economy and the communities that they represent.

"Cask beer is not the battle ground of the binge drinker, it is the unique product that differentiates the British pub from copied clones around the world.

"The reality is that this increase is likely to further encourage purchasing in the off-trade and drinking in an uncontrolled environment.

"We might have made the mistake of trying to sort out binge drinking, but this can really only be done through education."

Paul Baker

Managing director

Daniel Thwaites

"The duty increases are unwelcome and illogical and I think it is going to bounce back on the Chancellor.

"The trade lobby may wonder why their pleas have apparently fallen on deaf ears, but the Government is short of money and needs desperately to plug a big financial hole.

"I think they had already decided on these increases to raise some money, and I do not think they were even prepared to listen to what the trade told them."

Jonathan Neame

Chief executive

Shepherd Neame

"The brewing and pub trade has suffered from a juggernaut of prejudice from a capricious Chancellor, who has set out to damage

the industry.

"We can all ask where our lobbying went wrong, but in the end it looks as if the Government did not want to know.

"I was involved in the lobbying throughout the whole Budget process and it appeared that the Treasury was listening and MPs were sympathetic.

"But the Chancellor has adopted a myopic approach to the whole issue and has taken a swipe at the responsible sector of the industry."

Peter Amor

Chairman

Society of Independent Brewers

"It's a hammer blow to small brewers that have been working so hard to promote the concept of brewing local beers for local pubs and supporting their communities. More than 90% of small brewers' production goes through pubs, so this duty increase will hit us very hard.

"The Chancellor has taken the easy option, but it's a negative approach as far as controlling binge drinking is concerned.

"There has been no real attempt to look at variations on cider duty, so to me the whole thing has been ill thought out."

Tony Payne

Chief executive

Federa