Point of impact
"There is a real sense of fury in the trade concerning the Chancellor's colossal increase in beer duty in his recent Budget.
For those of us close to the industry, those of us who are day in, day out, engaged in brewing British beers and running local pubs, it seems that Alistair Darling has completely misunderstood the fragile nature of the business in 2008.
It would be true to say that never has the gulf between the cosy world of Westminster and the rest of Britain looked wider.
Pubs are places where the consumption of alcohol is licensed to carefully selected and trained individuals, working hand-in-hand with the police and other authorities, and always has been. Even since the reform of licensing hours the phantom of so-called "24-hour drinking" hasn't appeared.
In fact, a couple of weeks before Darling's bombshell, the government's own review of the new licensing regime concluded that pubs and bars had, on average, extended their hours by about 21 minutes.
Not exactly what the popular press has been implying, and for the vast majority of the pub world - great and small businesses running well-supervised outlets with moderate social enjoyment of a few pints - we now suffer an economic version of carpet-bombing where a tactical response to the badly run outlets is what's required.
Let's look at the full impact of such an immense increase in excise duty. Brewers first - the UK manufacturing sector is already depleted and in the case of brewing there are hardly any publicly-owned companies left.
The great regional publicly-listed companies are excellent examples of the long derided vertical integration, and those members of the Independent Family Brewers of Britain (IFBB) and the Society of Independent Brewers (SIBA) are mostly privately owned.
This is simply because there is such a poor return on capital in manufacturing, and such a high cost of entry to build the plant necessary, that no public company can secure the backing of City investors. So a hefty increase in the duty on beer is bound to add to the impression that this is an industry to avoid investing in, unfortunately.
And what about the implications of Alistair Darling's Budget for the average pub across the UK? We know that the average pub is a small business with fragile margins already under pressure with costs rising. The increase in beer duty will further reduce the profitability of these community pubs and for many lifestyle tenants the financial return will not be worth the long hours.
On top of this, the increase will not impact on the binge-drinking element, as the off-trade will continue to sell below cost and it will therefore further encourage 18 to 25-year-olds to "pre-load" on cheap booze before they go to the pub, so the effect for the on-trade will be to close more smaller pubs.
And that's just the first year. Imagine the impact of the accelerator - which sees the duty on alcohol rise by two percentage points above inflation over the next four years - that was also announced in the House of Commons on March 12.
As this all sinks in during these next few weeks it's surely time that every MP had a reminder of the full impact of this plan on our two great institutions - the British pub and the British pint."
Paul Wells is chief executive of Charles Wells
