Duty inequality with supermarkets 'economically counterproductive'

Speaking at the Houses of Commons in Westminster, London, yesterday (Wednesday 15 March), Chancellor Jeremy Hunt announced from 1 August this year, the duty on draught products in pubs would be up to 11p lower than the duty in supermarkets.

However, while Society of Independent Brewers (SIBA) chief executive Andy Slee said he “welcomed” the draught relief, with overall duty still due to increase in line with inflation from August, the Government has “eroded the benefits” of the changes.

Slee added: “We are disappointed in the lack of support for pubs, bars and taprooms, which are a critical part of small brewers’ businesses and are facing existential threats from energy price hikes, a cost-of-living crisis and other inflationary costs.”

Additionally, JD Wetherspoon chairman Tim Martin stated anything “less than equality” was an “unsustainable distortion” and was “economically counterproductive.”

Make-or-break

He said: "Any reduction in the tax disparity between pubs and supermarkets is welcome; Wetherspoon has been campaigning for tax equality for a long time.

“This gesture by the Government is a tacit acknowledgment that something needs to be done. We will investigate how much of the tax disparity remains after this move by the Chancellor.”

In addition, Campaign for Real Ale (CAMRA) chairman Nik Antona said while the move would “help” pubs compete with supermarket alcohol, with many “struggling to make ends meet”, the sector must “hope” firms are able to keep their doors open until August.

Antona continued operators would be “devastated” to hear energy support for businesses would end on 1 April while no extension of help for pubs and breweries on business rates was “bitterly devastating.”

He concluded: “This was a make-or-break Budget for pubs and social clubs, and the future of many businesses is now at risk with an imminent cliff edge in support and rocketing energy costs on top of the other pressures facing the licensed trade.”

Moreover, Hunt explained the increased draught duty relief was part of a new Government initiative, the “Brexit Pubs Guarantee”, and was “a differential a Conservative Government will maintain”.

Desperate need 

However, the “devil is in the detail”, according to Greene King CEO Nick Mackenzie, who raised concerns the extended draught relief would “not mitigate the challenging headwinds” faced by UK pubs.

Mackenzie added: “We are pleased to see the Chancellor has listened to the pub industry and increased the relief on draught beer, an important step to support the great British pub.

“However, pubs are in desperate need of the Chancellor’s ‘Brexit Pubs Guarantee’ as they are still being hit with higher costs on everything from energy to food.”

Additionally, Carlsberg Marston’s Brewing Company (CMBC) CEO Paul Davies claimed the hike in alcohol duty from August would “limit brewers’ ability to invest in the UK”, potentially resulting in higher prices for already squeezed consumers.

He continued: “While there are some encouraging signs of support from the Government in this Budget, we simply need more.

“Our sector still requires support, clarity, and a long-term plan for investment to pave the way for permanent growth, and we didn’t get this.”