The group of multiple site operators wrote a scathing letter to George Osborne to explain that while they support a beer duty cut, they felt the BBPA’s campaign was ‘morally flawed’.
A response from the association’s chief executive Brigid Simmonds states intentions to write to the Chancellor to set the record straight.
The multiple site operators claimed that cuts in beer duty don’t help either pubs or pubgoers, which Simmonds dismisses as ‘totally contradicted by the evidence’ in her rebuttal.
Simmonds signs off with a call for the industry to come together and campaign hard for another beer duty cut in next month’s Budget.
Read the full letter from Brigid Simmonds below:
Any suggestions that cuts in beer duty don’t help either pubs or pubgoers are totally contradicted by the evidence.
As we’re in a crucial phase of the campaign for a cut in duty in this year’s Budget, it is very unhelpful for anyone in the sector to be making such misguided claims, and I will be writing to the Chancellor, to set the record straight.
The central point in the letter is that beer duty cuts have not been passed on to pubs and pubgoers. As a trade body, we rightly have no input into how anyone sets their prices in the supply chain, but this claim doesn’t stand up to scrutiny.
As we don’t live in a world of price deflation, individual producers can put up their prices from time to time, for a range of reasons. But looking at the overall picture, the independent evidence is clear; Office of National Statistics data shows that wholesale prices for beer, the price that brewers sell at, are 2.2 per cent lower than before Budget 2013. For consumers, beer price increases in pubs have been at their lowest since the 1980s, at just over one per cent last year.
This shows that duty cuts are being passed on, and contrasts sharply with the pressures in the hugely damaging period of the beer duty escalator, where wholesale prices rose by 36 per cent between 2008 and 2013.
Jobs in brewing can’t be separated from jobs in pubs in the simple way that the letter suggests. This is because of the unique partnership between Britain’s brewers and our pubs, with pub beer sales still accounting for seven out of ten of all alcoholic drink sales in pubs – a figure that isn’t replicated in other parts of the hospitality sector. Pub jobs rely on beer.
Figures showing the huge 19,000 gain in employment caused by three duty cuts were not created here at the BBPA, they were compiled for us by independent analysts Oxford Economics, and are due to this huge interdependency between the brewing and the pub sector. Research also shows that one job in brewing generates 18 jobs in Britain’s pubs – an astonishing figure which shows the continuing importance of beer duty cuts in our sector.
The letter writers are also right to highlight the pressures caused by the big difference between on-trade and off-trade prices. But this misses the point, that supermarkets can far more easily absorb the huge hikes in beer duty we had seen up to 2013, as beer is such a small part of their total sales. In contrast, pubs are mostly small businesses relying heavily on beer sales.
Of course, beer duty reductions are not the only issue facing the sector. This is why we also campaign vigorously on a huge range of other issues where the Government should rightly take action, such as reform of the business rates system, a new approach to VAT, and a reduction in the costs of regulation – issues not mentioned in the operators’ letter but which we have raised with the Treasury.
However, the fact remains that beer duty rates remain at extremely high levels in the UK – four times higher than the EU average and thirteen times higher than in the largest European beer market, Germany. This is doing great damage to our sector, and I do hope that we can all come together and campaign hard for another beer duty cut in the Budget – something the vast majority in the on-trade already support.