Pints will still get more expensive even after the Chancellor’s five per cent beer duty cut – with a pub boss warning it would only ‘take the top off’ a 30p price rise due to inflation.
Jonathan Neame, chief executive of Shepherd Neame, said the company would pass on the 3p a pint duty cut on kegs it sells wholesale to pubs but drinkers are unlikely to see the benefits.
Landlords are already being clobbered by raising gas prices, supply chain pressures and shortages of bar staff and delivery drivers. More than eight in 10 have already raised prices or are planning to do so in the near future.
Rishi Sunak also announced a planned increase to the duty on lower-strength spirits, wine, cider and beer will be cancelled while the ‘irrational’ 28% duty on premium sparkling wines like prosecco and fruit ciders will be cut.
Drinks that will see taxes reduced include Bailey’s (41p a bottle), Gordon’s gin (9p per can), and Canti prosecco (87p per bottle). The tax take on beers like Stella and Carling will remain the same in shops but dip by 3p in pubs.
But other beverages will see increases, including Cockburn’s port (£1.09 per bottle), Hardy’s merlot (35p per bottle) and Scottish favourite Buckfast (81p per bottle). It remains to be seen if retailers will pass any savings on.
In addition to the beer duty cut, Rishi Sunak also announced a planned increase to the duty on lower-strength spirits, wine, cider and beer will be cancelled. The changes will see the tax take increase on some drinks and decrease on others
The Chancellor joined Boris Johnson at Fourpure Brewing Co in Bermondsey, London yesterday afternoon for a publicity stunt to promote the cut to beer duty. However, eagle-eyed critics spotted that they were lifting 30-litre kegs. Only 40-litre ones will be subject to the duty cut. ‘This misses a huge amount of the craft beer industry,’ a brewery founder told the Guardian
How will the cost of YOUR drink go up or down?
– Echo Falls Zinfandel rose wine: 23p less tax on a bottle in shops.
– Stella Artois: 3p less tax on a draught pint in the pub, no change in shops.
– Guinness: 3p less tax on a pint in the pub, no change in shops.
– Strongbow: 2p less tax on a pint in the pub, 0.5p less tax in shops.
– Strongbow Dark Fruits: 13p less tax on a pint in the pub, 1p less tax in shops.
– Hardy’s VR Merlot red wine: 35p more tax on a bottle in shops.
– Canti Prosecco: 87p less tax on a bottle in shops.
– Harvey’s Sherry: 51p more tax on a bottle in shops.
– Taylor’s Port: £1.09 more tax on a bottle in shops.
– Smirnoff Vodka: No change on a bottle in shops.
– Bailey’s Irish Cream: 41p less tax on a bottle in shops.
Source: HM Treasury
Responding to Mr Sunak’s Budget announcements, Mr Neame told Radio 4’s Today programme: ‘We will pass on the duty cut at a wholesale, but in all honesty, pubs are facing between 25 to 30p per pint inflation and this will do will take the top off that.
‘It will reduce the rate of increase, but there is roughly 14% inflation impacting most hospitality businesses, so while I’d love to say the price of beer come down its very hard to see that because a lot of inflation is still coming down the track in terms of energy and food etc.
‘At the moment there are terrific supply chain squeezes that most people anticipate will last for six to nine months, and hopefully afterwards inflation will start to ease off.’
Most pubs will also benefit from £7billion worth of cuts to business rates, including the cancellation of next year’s increase in the rates multiplier and a 50% cut in the total bill.
Mr Neame welcomed the move but argued there was more to be done.
‘It won’t help Shepherd Neame so much as a multi-site operator but it will help our tenanted licensees which are two-thirds of our pubs,’ he said. ‘It’s a great benefit for them, and it’s also a great benefit because it stimulates investment – as before rates would go up when you invested.
‘I think what has been missed here though is the chance for fundamental reform on rates. This is a medieval tax that doesn’t balance out the overall economic activity between the digital and non-digital world, and too much is being borne but hospitality and retail at the moment.’
The teetotal Chancellor used his Budget to set out a new Draught Relief policy which will see beer and cider duty reduced by five per cent.
He said that amounted to the biggest cut on the tax on beer in 50 years and the ‘biggest cut to cider duty since 1923’.
He also announced a planned increase to the duty on spirits, wine, cider and beer will be cancelled while the ‘irrational’ 28 per cent duty on premium sparkling wines like prosecco and fruit ciders will be cut.
What are the main changes to the alcohol tax system and how will prices change?
– Duty rates for draught beer and cider will be cut by five per cent – taking three pence off a pint.
– Duty rate on draught fruit cider will be equalised with beer, cutting the rate on fruit cider by 20 per cent, taking 13 pence off a pint.
– All products will be taxed according to their Alcohol By Volume (ABV), cutting duty on lighter wines and cider. Tax on a 10.5% bottle of Rose will decrease by 23 pence per bottle. But the levy on white ciders and stronger still wines will go up.
– Sparkling wine will be taxed at the same rate as still wine, ending the 28 per cent premium currently applied to the product.
However, the Chancellor’s plan to simplify the alcohol duty system – which he said was made possible by Brexit – will see some drinks become more expensive, with red wine drinkers among those hit.
Mr Sunak said that under his new system – which will be rolled out in February 2023 – the stronger the drink, the higher the rate of tax will be.
That will also mean less-strong drinks like rose wine and liqueurs, which are currently ‘over taxed’, will become cheaper.
Mr Sunak and the Prime Minister Boris Johnson marked the announcements by visiting Fourpure Brewing Company in Bermondsey, central London, as they poured pints and saw the brewing process.
Hospitality bosses welcomed the changes announced by Mr Sunak.
They said pubs, brewers and beer drinkers ‘will be toasting the Chancellor’ for bringing forward a ‘range of business-boosting measures’.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: ‘Pubs, brewers and beer drinkers will be toasting the Chancellor today for a range of business-boosting measures.
‘Pub goers will also be toasting the Chancellor for announcing a five per cent lower duty rate on draught beer worth £62million.
‘This is great news for our local pubs and recognises the crucial role they play in our economy and society.
‘However, the overall beer duty rate in the UK remains amongst the highest in Europe.
‘It is vital for Britain’s brewers, a world class homegrown manufacturing success story, that the overall beer duty burden is reduced – not just duty on draught beer in pubs.’
Mr Sunak said that under his new system – which be rolled out in February 2023 – the stronger the drink, the higher the rate of tax will be
The Chancellor said the Draught Relief amounts to the biggest cut on the tax on beer in 50 years and the ‘biggest cut to cider duty since 1923’
‘At last, ministers pay attention to the plight of pubs’
Pub owner Ian Howarth, 45, (pictured) said the Budget would go some way to help his business following a ‘disastrous two years’
Pub landlord Ian Howarth said measures in the Budget would go some way to help his business following a ‘disastrous two years’ in which he lost more than £150,000 – but wants them to be implemented sooner.
Mr Howarth, 45, said ‘wet-led’ pubs like his that rely entirely on the sale of drinks had been left behind during the pandemic – particularly when hospitality premises could only open if serving meals.
He believes the promise of a 50 per cent reduction in business rates and a 5 per cent cut in the duty on draught beer and cider shows the Government is ‘finally’ paying attention.
Mr Howarth, who runs the Queen’s Head in Buxton, Derbyshire, said: ‘For once it looks like wet-led businesses are finally being listened to. We’re out of pocket by over £150,000 – but in terms of loss of earnings we’re probably down by £750,000.
‘Because we make 70 per cent from draught beer and cider, the recent announcement will go some way to fill the gaps left by Covid.’
However, Mr Howarth, whose family have owned the Queen’s Head since 1967, said pubs were ‘desperate’ for the help to come imminently rather than in 2023.
He added: ‘We’re really on our knees already. Rather than waiting until 2023 to make these changes, we’d want to see them put in place from midnight tonight.
‘A lot of businesses will probably go under before it’s implemented, so we really need to see these changes sooner rather than later.’
The Chancellor told MPs that the existing alcohol duty system in the UK is ‘outdated, complex and full of historical anomalies’.
He said his overhaul will deliver the ‘most radical simplification of alcohol duties for over 140 years’, resulting in a ‘simpler, fairer and healthier’ system.
Mr Sunak said Brexit made the shake-up possible, telling the Commons the Government is ‘taking advantage of leaving the EU’ by rolling out a raft of changes.
The changes will see the overall number of alcohol duties reduced from the current 15 to just six.
Mr Sunak said the new system will be guided by a ‘common sense principle’ of ‘the stronger the drink, the higher the rate’.
He said: ‘This means that some drinks, like stronger red wines, fortified wines or high strength white ciders will see a small increase in their rates because they are currently undertaxed given their strength.
‘That is the right thing to do and will help end an era of cheap high strength drinks which can harm public health and enable problem drinking.’
The Chancellor said the ‘converse is also true’ for alcoholic drinks which are not as strong.
He said: ‘Many lower alcohol drinks are currently over taxed and have been for many decades.
‘Rose. Fruit ciders. Liqueurs. Lower strength beers and wines. The changes mean that they will pay less.’
Mr Sunak said that drinking habits in the UK had changed, with more people now consuming sparkling wines as he moved to make them cheaper.
He told MPs: ‘Over the last decade, consumption of sparkling wines like Prosecco has doubled. English sparkling wine has increased tenfold. It is clear they are no longer the preserve of wealthy elites.
‘And they are no stronger than still wines so I am going to end the irrational duty premium of 28 per cent that they currently pay.
‘Sparkling wines wherever they are produced will now pay the same duty as still wines of equivalent strength.’
Mr Sunak had been under pressure from Tory MPs to bring forward help for struggling pubs.
Many Conservative MPs had been calling for a reduction in beer duty and Mr Sunak obliged as he announced his new ‘Draught Relief’ policy.
Hospitality bosses welcomed the changes as they said pubs, brewers and beer drinkers ‘will be toasting the Chancellor’ for bringing forward a ‘range of business-boosting measures’
Bottles of Rose wine will see tax bills slashed. The tax applied to a bottle of Echo Falls Zinfandel will be 23p lower
Wine seller: ‘The only upside? There was no rise!’
Pour show: Rob Weatherhead, 40, is ‘cautiously optimistic’ about the reduced duty
Wine seller Rob Weatherhead said many of his customers will pay more because they buy stronger red and white – which will not benefit from the cut in duty on bubbly and lower-strength drinks such as rose.
Although he is ‘cautiously optimistic’ about the reduced duty, he is also concerned that the change will not come in until 2023.
Mr Weatherhead, 40, who bought Affordable Wine, based in Rochdale, this year, said of the cut in duty on champagne and sparkling wines: ‘It’s not necessarily a big saving to business or consumers. It’s a welcome change as long as the cut is passed along to businesses by the suppliers.’
He said that although the change would ‘wipe off about 80p per bottle of sparkling’, some wholesalers might not pass on the saving as they seek to recoup losses from the pandemic. ‘We’ll see what prices end up being with our wholesalers and if we see any benefit from it,’ he added. Had the changes taken place sooner, Mr Weatherhead said they could make a difference when customers stock up for Christmas.
He added: ‘The only upside is no increase was proposed. Your average wine drinker won’t consume any sparkling wine over the course of a week, or even a month.’
Mr Weatherhead also fears that as the cost of living goes up, families will tighten their belts at Christmas, either buying less wine at home or spending less time at the restaurants his firm supplies.
He told the Commons: ‘A fairer, healthier system supports pubs so I can announce today Draught Relief.
‘Draught Relief will apply a new, lower rate of duty on draught beer and cider.
‘It will apply to drinks served from draught containers over 40 litres. It will particularly benefit community pubs who do 75 per cent of their trade on draught.
‘And let me tell the House the new rate: Draught Relief will cut duty by five per cent.
‘That is the biggest cut to cider duty since 1923, the biggest cut to fruit ciders in a generation, the biggest cut to beer duty for 50 years.
‘This is not temporary, it is a long term investment in the British pubs of £100million a year and a permanent cut in the cost of a pint of 3p.’
He added: ‘These much needed reforms will come into effect in February 2023.’
Miles Beale, chief executive of the Wine and Spirit Trade Association, welcomed the decision to freeze wine and spirit duty.
He said: ‘The decision to freeze wine and spirit duty comes as a huge relief to British businesses, the hospitality sector – including its supply chain – and consumers, giving everyone a much-needed break to help them recover from the pandemic.
‘Chancellor Rishi Sunak should be commended for listening to our calls for support and understanding that punishing tax hikes are not the best way to reinvigorate the sector.
‘By offering continued respite to the UK wine and spirit sector his actions will help save jobs and – in time – replenish revenues to the Treasury through growth in our potential-filled sector.’
Jez Lamb, founder of the Wirral-based craft beer marketplace [email protected], questioned whether the shake-up will benefit smaller breweries.
He said: ‘The devil’s always in the detail. It’s brilliant to see alcohol duty cut on draught beer but that’s only for ‘containers’ more than 40L.
‘This is great for the big breweries but so many smaller craft brewers only supply in 30L containers.
‘This just further supports the big players in the market, not supporting the smaller, independent breweries who need support most.’