Operators and trade bodies have given their reaction to George Osborne’s Budget announcements including a freeze in alcohol duty and the introduction of a sugar tax.
While the Campaign for Real Ale (CAMRA) called the lack of a duty cut “an opportunity missed”, most commentators were sanguine about the decision – pointing out that an increase would have wiped out the benefits of the previous three cuts.
There was also praise for changes to business rates relief, with threshold rising from £6,000 to £15,000
There were concerns as to what effect the levy on sugary drinks will have on the sector. The Chancellor announced that a tax will be introduced in 2018 for manufacturers but not retailers. It will see a main rate for drinks with over 5g of sugar per 100ml and a higher rate for those with more than 8g. Osborne said the £520m raised from the levy would go towards funding school sports programmes. He said: “I am not prepared to look back at my time here in this Parliament …. and say to my children’s generation, ‘I’m sorry, we knew there was a problem with sugary drinks and we knew it caused disease but we dumped the difficult decisions and did nothing’.”
On duty, Osborne announced that beer, cider and spirits will all get a freeze while other alcohol duties will rise by RPI inflation as at March 2016.
Duncan Garrood, chief executive of Punch, said: “Pubs are a hugely important sector in the UK’s local and national economy, providing thousands of jobs across the country. Central to many communities, they are an integral part of our rich British culture.
“We always welcome and are very grateful for the positive intervention from the government in the pub and beer sector, with the freeze in beer and cider duty announced today sure to be hugely appreciated by our operators, and something we ourselves have heartily supported and campaigned for.
“It is also fantastic to see that business rates will be reduced for 250,000 small businesses, with a further 6,000 becoming exempt, and we hope that our Publicans will be among those who benefit. However, more assistance in the long term is needed to continue to develop the pub industry, as remarkably it remains the most taxed of all retail businesses in the UK and across Europe. This is particularly prevalent when considering the other pressures on today’s publican, including the upcoming introduction of the National Living Wage.”
Kevin Georgel, chief executive of Admiral Taverns said: “The announcements from the Chancellor to freeze beer duty and make meaningful changes to the Business Rates system are very welcome.
“The cost burden on the thousands of small, independently operated pubs across the UK has been too high for too long. Our industry creates jobs and is vital to local economies as well as to the communities which they serve.
“Whilst these changes are welcome as a move in the right direction, we would urge the Chancellor to continue to ensure that the tax burden on pubs is further reduced in order to create a level playing field and make sure that our Great British Pubs can compete and prosper.”
John Vincent, founder of LEON restaurants and sugar campaigner said: “All credit to George Osborne for having the vision to introduce a levy on sugary drinks in the Budget. The voluntary sugar tax that Jamie Oliver and Leon introduced in September 2015 showed what could be done. What is so good is that the money raised will be spent directly on things that will help make children healthier.”
Bath Ales’ managing director Roger Jones, said: “This Budget Statement feels like lots of froth and not enough body. I’m not sure there’s much in this for the team at Bath Ales or our customers.
“Beer duty hasn’t increased but it’s not enough. We’re still not on a level playing field with cider on duty. The freeze is not enough to benefit consumers and I think the Chancellor should be doing more to champion the British brewing industry.
“Freezes on fuel duty and cuts to corporation tax are small steps to help businesses like ours. Though bigger steps are needed to support businesses that have lots of employees in very different roles.”
David Forde, Heineken UK managing director, said: “We’re pleased that the Chancellor will not be increasing beer and cider duty for the coming year. Whist we would have liked to have seen a cut in these duties, it’s good news that we haven’t had an increase; which would have undone the positive effects of the cuts made in recent years.”
“The fact remains that pubs already pay 34p in every pound of turnover in tax, shoulder one of the highest business rates burdens of any industry and face rising wage bills. Duty cuts on beer and cider would have helped to reduce these pressures. Furthermore, this tax freeze will not address the challenges apple farmers and cider-makers face. Cider making is a long-term investment that supports thousands of rural jobs and has the potential to be a real British success story.”
British Beer and Pub Association chief executive Brigid Simmonds said: “This freeze means that beer duty is now 17 per cent lower than it would have been, had the Chancellor stuck with the escalator policy.
“To achieve three cuts and a freeze from the Chancellor over four Budgets, shows a real commitment and concern for both brewing, an important manufacturing industry, and our nation’s pubs. Beer is already 20p cheaper in pubs than it would have been under the escalator and the industry has the confidence to invest.
“Also, around 75% will benefit from the changes to business rates, with a pub on a rateable value of £50,000 saving £625 per year, from April 2017, and pubs with RV of less than £12,000 paying no Business Rates at all.
“However, we are still paying the second highest beer tax in the whole of Europe. Pubs are facing rises in costs in the coming months, from the living wage, the apprenticeship levy and auto enrolment pensions. The Government has more to do, to support pubs but great to see Government acknowledge how vital they are to their local communities.”
Association of Licensed Multiple Retailers chief executive Kate Nicholls said: “The Chancellor has made some positive moves towards supporting businesses, and we welcome measures to reduce business rates burdens, but there is a risk that costs will continue to rise for employers.
“We need confirmation that the tax on sugary drinks will be a true levy on producers and not a sales tax that will increase costs for retailers. The Chancellor has indicated that there will be a consultation on its introduction and the ALMR will be looking to liaise with the Government to ensure that additional costs are not passed on to pubs and bars.
“Extension of Small Business Rate relief is a welcome first step in reducing rates burdens for businesses, but more needs to be done to address a system that currently sees pubs and bars paying 15 pence per pint in rates compared to about 1 penny per pint in supermarkets.
“Changes to the administration of rates have been a long time coming, and the ALMR has campaigned for a switch to the CPI rating, but we are still looking for the ‘once in a lifetime’, root and branch reform of business rates that continue to hamstring many businesses.
“A move to take the lowest paid out of income tax and the abolition of Class 2 NICs will succeed in putting more money in the pockets of consumers, but we are still looking for decisive and meaningful reform that will cut costs for businesses and free up money for investment in jobs and growth.”
CAMRA Chief Executive, Tim Page, said: “A freeze in beer tax is an opportunity missed to back the continued revival of brewing in the UK. With UK drinkers paying the second highest rate of beer duty in Europe, a beer tax cut was needed to keep pubs open, boost the brewing sector and to keep the cost of a pint stable.
“However, the sustainability of smaller community pubs has been boosted by welcome decisions to cut commercial stamp duty and the business rates paid by small businesses. The extension of small business rate relief will save publicans of smaller pubs thousands of pounds annually which will help keep community pubs as viable businesses and at the heart of community life. Likewise, cuts in commercial stamp duty will reduce the financial barriers faced by people looking to purchase small community pubs to keep them open and serving the needs of local people.”
Neil Morgan, managing director, Pub & Restaurants at Christie & Co, said: “The cut on commercial property stamp duty is a tremendous boost to the sector. Our clients will be saving money from tomorrow, with a typical buyer purchasing a pub saving £5,000 on a pub worth £270,000.
“Tax savings for lower paid workers will leave them with more of a discretionary spend. This may give a boost to the leisure and licensed sectors.”
Christie & Co’s head of licensed – London, Simon Chaplin, said: “Doubling the threshold for Business Rate payers from £6,000 to £15,000 will be a significant saving for independent restaurant, bar and cafe operators. The freeze in beer and cider duty will of course have a positive impact on both the pub and restaurant sectors, although consumers, and as a result, operators, will feel the effect of the planned rise in wine and spirits.
“The cut in Business Rates will also help cover the increase in National Living Wage for many of our clients.”
Martin Couchman deputy chief executive, British Hospitality Association said: “The BHA is pleased to see the abolition of the Carbon Reduction Commitment energy efficiency scheme which was very bureaucratic and cumbersome and caused difficulties for franchise arrangements.
“Devolved powers to regions to improve transport and connectivity will support job creation and local tourism. We are pleased that English counties and regions will get elected mayors. Tourism should be a top priority for these mayors especially in coastal and rural areas.
“We were also pleased to see the support for tourism and cultural activity with the announcement of cathedral investment, tax breaks for museums and travelling exhibitions.
“We were disappointed not to see a reduction in National Insurance and a delay in the introduction of the Apprenticeship Levy which would have been helpful in reducing the total impact of the National Minimum Wage and the introduction of National Living Wage in April this year.
“Small businesses will be pleased to see the business rates reductions.
“Despite the catastrophic effects of recent flooding, our industry has – and continues to - rally together to support local communities and the people living in them. The BHA welcomes the Chancellor’s announcement to support flood struck businesses with the investment in flood defence and resilience measures.”
Frederic Landtmeters, managing director of Molson Coors (UK & Ireland): “Molson Coors welcomes today’s announcement that beer duty will be frozen, and we applaud the government’s recognition of the important contribution the beer and pub industry makes to the UK economy.
“Whilst the freeze is welcome, there is still some way to go and we urge the Government to continue working closely with brewers and publicans to secure the long-term sustainable growth of an industry that contributes £22bn to the UK economy and supports almost 900,000 jobs.”
