SIBA sets out Small Breweries’ Relief reform proposals

27-Jun-2018 - Last updated on 27-Jun-2018 at 06:43 GMT

Call to arms: SIBA is calling on brewers, publicans and beer lovers to back its proposals

The Society of Independent Brewers (SIBA) has set out its proposals for reform of the Small Breweries’ Relief Scheme (SBR), as it seeks to encourage growth and investment in British independent brewing, while protecting smaller craft producers.

SIBA is calling on brewers, publicans, pub companies and beer lovers to back its proposals for what it calls “positive reform”. The organisation believes that its proposals, if adopted, will improve on existing Government policy and further improve choice and diversity for beer drinkers.

The major proposals SIBA has called on HM Treasury to adopt are:

Positive changes to the shape of the relief curve for breweries making over 5,000 hectolitres (hl) of beer per year to encourage further growth, removing the ‘cliff edge’ that currently exists as the relief is rapidly withdrawn.
No withdrawal of relief for any brewer below 5,000hl to safeguard the viability of smaller businesses that depend on SBR at current levels.
Support for an industry-led review at least every five years to ensure SBR continues to work well and promotes sustainability in the sector.
New measures to encourage normal mergers and acquisitions activity.
Removal of beer that is exported from the SBR calculation to encourage export activity.
An extension of the scheme to brewers up to 200,000hl as permitted under EU law.

'Model for reform'

Alongside these recommendations, SIBA has published a model for reform, outlining how changes can be made to the relief curve and what this means in cash terms on every barrel of beer brewers make.

The organisation has also released a report from the respected Centre for Economic and Business Research (CEBR), which examines how SBR is working and how it can be reformed.

Crucially, SIBA does not support the proposal of the Small Brewers Duty Reform Coalition (the Coalition), which demands a withdrawal of relief for brewers making below 5,000hl. The organisation states that there is “no convincing rationale for removing relief from small brewers to ‘compensate’ larger brewers”.

SIBA’s model for reform would cost the Government around £9.2m in revenue to smooth the relief curve for brewers producing over 5,000hl a year. The Coalition’s proposals are also predicted to cost in the region of £10m. However, SIBA hopes that the growth, investment and job creation created as a result of these policy changes would, in time, offset the foregoing of duty by the Treasury.

“SIBA was responsible for convincing Government to introduce SBR in 2002 and to improve it in 2004,” said Mike Benner, SIBA’s chief executive. “Now, SIBA are leading the way to make SBR fit for the radically different beer market we have today. We believe small changes can be made to an already winning formula with a modest impact on Treasury coffers. We believe our proposals present a strong case for reform.”

Explaining the rationale for SIBA’s proposals, Benner added: “Reform is needed to remove the ‘cliff edge’ to growth that exists. However, that reform shouldn’t come at the expense of smaller brewers currently in receipt of the full level of relief.

“We’re now calling on everyone in the industry, big or small, to look at SIBA’s proposals and back our case for reform in the November Budget.”

'Two core issues'

Ian Fozard, newly elected SIBA chairman, chairman of Rooster's Brewery and lead financial adviser to SIBA’s advisory group on SBR reform said: “Our proposals for reform are rooted in a deep understanding of how breweries work.

“Their costs, their motivations and their experiences of growth that we’ve derived from our wide and diverse membership base. We have a model of reform that works, and that we think the Treasury will adopt.”

Fozard also stressed the importance of campaigning not just for relief of SBR, but also for an overall cut in the rate of beer duty, and increased help for pubs suffering as a result of changes to business rates.

“We now have an opportunity to gather industry support and press to reform small breweries’ relief ahead of the November budget,” he said. “But SIBA will also be campaigning in the run-up to the Budget on the two core issues that affect the whole industry.

“We all know the headline rate of beer duty remains too high and the burden on pubs through business rates is unsustainable. The beer and pubs industry has a number of challenges ahead, but SIBA will be leading the way for our members.”