Beer duty cut gripes miss true impact of the Budget

27-Mar-2015 - Last updated on 30-Mar-2015 at 09:01 GMT

Beer duty is now a full nine pence per pint lower than it would have been

At the BBPA, we are still receiving a huge amount of positive feedback from across the sector about the one penny cut in beer duty in the Budget, writes chief executive Brigid Simmonds.

While it’s not quite a case of ‘what have the Romans ever done for us', I was struck by some of the negative commentary, as featured on the front page of the PMA last week.

There will always be some who will say that a one penny cut in beer duty doesn’t make much of difference to the bottom line. It is easy to portray it as just a small fraction of the price of a typical pub pint.

Yet this misses the true impact of the Budget.

Unprecedented

Firstly, it was the third consecutive time we have seen such a cut – a truly unprecedented change in the direction of tax policy for British beer.

They say ‘every penny counts’, for a reason. Beer duty is now a full nine pence per pint lower than it would have been, had the Government stuck to the disastrous ‘escalator’ policy that was still the official line, just a little over two years ago.

Whilst other costs continue to rise of course, to suggest that consumers are not seeing the benefit of this change is not the case. Since the first duty cut, on-trade beer prices have been increasing at around 2% per year, the lowest increases in pub prices since 1987 when the index started.

On top of this, net capital investment in the sector is expected to exceed £1.1bn this year.

All of this has created confidence in our sector. For the first time in a decade, beer sales grew in 2014, and we are seeing increased investment, not just in pubs, but in the beer category as whole, such as through ‘There’s a Beer for That’ and other campaigns.

Battles

Taken together, the three duty cuts have boosted employment in the brewing and pub sector by around 20,000, with many pubs saved as highlighted in the recent CEBR report for CAMRA.

Of course there are battles to be won on business rates, licensing and the cost of regulation for pubs, but we certainly need to keep up the pressure when it comes to beer duty. Our rates of tax are still three times higher than the EU average, and an astonishing 14 times higher than in Germany.

It is going to take years to undo the damage caused by the tax rises from 2008 to 2013, but we have seen a huge step in the right direction.