Self-defeating ritual of ever-higher beer duty must end

Nik Darlington 11.11am

Beer duty has bilged by more than 40 per cent in the past four years, which means when you buy that satisfying pint of ale in your local pub, around 190ml belongs to the taxman.

Meanwhile, more than 5,800 pubs have shut up shop since 2008 at a rate of eighteen per week. Quite frankly, it’s miserable, the sort of news to drive even the most abstemious to drink.

MPs, pub and brewing industry groups and campaigners have made a number of attempts in the past to quash the beer duty escalator, including a successful debate in the House of Commons last November, but to no avail. The Chancellor plans to go ahead with a further increase in next month’s Budget.

Another increase in beer duty would compound the folly of minimum unit pricing and put ever-more pricing pressure on pubs. There’s a semi-plausible argument from some publicans that MUP could chip away at some of the supermarkets’ competitiveness and send punters back through their doors. Yet any gains from that are surely offset by the pain in everyone’s pockets of a dearer pint.

There is a certain silver lining. Politicians have always tinkered with booze taxes, and we can be pleased that Mr Osborne doesn’t wish to follow the lead of his Liberal predecessor Sir William Vernon Harcourt, who in 1895 tried to balance the budget on the back of beer duty alone.

In that November debate, economic secretary to the Treasury, Sajid Javid, hinted that beer duty was simply too lucrative to freeze or reduce, garnering £35 million this year and £70 million the next. Furthermore, it’s Labour’s tax. True, but it would not be the first time this Government had reversed a fiscal act of the previous government.

One gets the feeling that there’s a moralistic streak at play, similar to that driving the MUP policy. I have no truck with being slightly moralistic about alcohol, which is as dangerous a substance as any if in the wrong hands, in the wrong volumes, at the wrong time.

Yet that is why further inflating the price of proper beer in pubs is so self-defeating. Surely it is reasonable to encourage the survival of pubs as focal points of the community, and relatively safe, secure and well-monitored drinking environments. You don’t have a publican withdrawing that second bottle of Buckfast as you slouch on your sofa on Wednesday morning.

So to finish up, register your support with the Mash Beer Tax launched today and request the Chancellor calls time on ever-higher beer prices in pubs.

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Pub companies report healthy profits but what can Government do to halt the decline of the Great British Pub?

Nik Darlington 10.14am

The Campaign for Real Ale (CAMRA), which has 130,000 members, has been lobbying the Government to require pub companies to offer genuinely tie-free and guest beer options to pub lessees. CAMRA chief executive, Mike Benner, says the Government is acting too weakly to save Britain’s pubs:

The Government has been cavalier in rejecting the recommendations of the Business Select Committee and instead putting its faith in the ability of the very companies accused of malpractice to finally put their house in order.

We are pleased the Government has recognised the serious problems of unfair practice in the relationship between the large pub companies and lessees but deeply disappointed that they are proposing only a weak package of reforms. Given repeated broken promises from the pub companies, consumers and publicans will no doubt be highly sceptical whether much of this will be delivered.

The Government hasn’t exactly rejected the Business Committee’s recommendations, though Ministers have refused to act based on what they say is conflicting and weak evidence.

The overriding notion from the Government is that self-regulation ought to be pursued to its full extent before the state steps in. Indeed, this should happen in most cases. The pub tie can work to the wider industry’s advantage and the challenge is not the tie itself, rather it is making the relationships between publicans and brewers function more effectively.

The Industry Framework Code will be made legally binding, which though a small step ought to be beneficial to pubs. A Pub Independent Conciliation and Arbitration Service (PICAS) will be the mediator for this Code. Again, this ought to be beneficial, though that will depend on how genuinely independent PICAS is.

A new Pubs Advisory Service (PAS) will offer free advice to all prospective and current tenants and lessees. To which, an industry cynic might ask, how much use is free advice when you only have recourse to industry bodies that may or may not be on your side?

Ministers may dispute the effects of the pub tie on the industry, but if this plan for tighter self-regulation is shown still to be failing pubs and favouring pub companies, the Government should take a more active role. Pubs, collectively speaking, are part of a great British institution.

Twenty-five pubs are closing every week in this country. At its most basic, this challenge is not so much about who owns the pub - whether it’s a free house or tied - rather it is about whether people are visiting pubs at all.

Prior to this year’s Budget, I blogged about the Treasury’s unhelpful sleight of hand over beer duty. The Chancellor wanted to be seen to be helping pubs while balancing the need to encourage more responsible drinking. Perhaps as a gesture it succeeded but in policy terms it was typical Treasury elusion. The cost of drinking out relative to drinking in the home is still steep.

Encouragingly, based on financial figures from the major pub companies, punters are still venturing out for a pint. Greene King, Marston, Mitchell & Butlers, Young’s and Fuller’s all reported rising sales and profits today. As the darkness draws in, seasonally and economically, Britons are “seeking solace in the pub”.

So people are visiting those tied pubs run by the bigger chains, largely because they can stomach the rising input costs better than many smaller free houses. They can also afford prime locations. These are challenges that tighter regulation of the pub tie cannot solve.

Treasury’s beer duty plans will do nothing to help British pubs

Nik Darlington 7.49am

It’s culture week at Egremont, and what else finer an example of British culture than the simple, honest public house?

There is a campaign underway in Parliament to get the Government to abandon the beer duty escalator in the forthcoming Budget on 23rd March.

An Early Day Motion has been tabled by Andrew Griffiths, the Tory MP for Burton & Uttoxeter (home to the influential ‘Burtonisation’ brewing technique), which urges ministers to relieve financial pressures on a struggling industry (twenty-nine pubs close each week) that sustains nearly one million UK jobs. It is thought that the escalator, which would add an extra five pence per pint, could cost 10,000 jobs and a subsequent reduction in sales cost the Treasury £40 million.

Last year, George Osborne eased some of the strain by reversing Labour’s increase in cider duty (Labour MPs are few and far between in the West Country) and avoiding any greater rate of increase in alcohol duty. This was a positive move and a sign that the Conservative party was holding to its pre-election campaign to ‘Save the Great British Pub’. Since then, the Treasury has been conducting a review of alcohol taxation. Included in this is minimum alcohol pricing, banning outlets from selling drinks for less than their tax. It is hoped that this will stop the use of alcohol as a loss-leader, a tactic that supermarkets and other retailers employ to drive footfall and which encourages cheaper drinking in the home, instead of the pub.

So far, so sound for pubs. Another Treasury commitment is to introduce a new additional duty on high strength beers over 7.5% ABV and a reduced rate on beers of 2.8% ABV or lower. As a headline, it looks impressive: tackle excessive consumption of highly alcoholic drinks while protecting responsible drinkers of the sensible British pint.

Think again. Visit your standard local and scan the handpumps: how many of them are over 7.5% and under 2.8%? The answer, in all liklehood, is none.

In my home town, Richmond, we have a number of excellent pubs, the majority of which are divvied up between Young’s and Fuller’s. Young’s beers range in strength from their Ordinary Bitter (3.7%), through London Gold (4.0%) and Special London Ale (a strong 6.4%). Even their bottled Old Nick, a barley wine at 7.2%, doesn’t make George Osborne’s high strength grade. Similarly, Fuller’s regular range comprises one of my favourites, Chiswick (3.5%), London Pride (4.1%), ESB (5.5%) and Bengal Lancer (5.3%). Some, such as the barley wine Golden Pride (8.3%), go over the limit but it is an extreme rarity.

Your typical premium lagers like Stella Artois (5.0%), Heineken (5.0%), Carling (4.0%), Fosters (4.0%) and Kronenbourg 1664 (5.5%) also sit within the range. I cannot think of any drink - beer, lager or cider - at less than 2.8% apart from a non-alcoholic beer like Beck’s Blue.

So in order to find a drink that is covered by the Treasury’s new duty scale, you have to go to the specialist saloons that serve bottles of knock-your-socks off Trappiste beers from Belgian. They are marvellous watering holes but your ‘Great British Pub’ they certainly are not.

What this all amounts to is a policy that on the surface looks tough on irresponsible heavy drinking whilst being encouraging to the downtrodden traditional British boozer, but is actually a typically disingenuous sleight of Treasury arithmetic. Almost all beer sold in pubs will be unaffected by the new duty scales.

The worst part of it is the weaker rating, which is set far too low to be anything helpful to drinkers and publicans. A better measure would be that of an ‘ordinary’ pint of beer, such as something around 4% ABV. Of course, the Treasury doesn’t want to count ‘ordinary’ pints in a lower duty rating because it would cost a lot more in foregone tax revenue.

Even a focus on 4% ABV is misleading because it still does nothing about excessive drinking and anti-social behaviour. Go into any medium-sized town centre on a Saturday night and round up the rowdiest revellers. Ask them what they have been drinking. It doesn’t take a genius to guess that they are more likely to have been drinking Fosters or Carling (both 4%) than Fuller’s Special London Ale (6.4%) or Golden Pride (8.3%).

The Chancellor is not giving anything else away until the Budget but I am informed that ministers are considering all options, including the progressive beer duty. Minimum alcohol pricing is the right step towards reversing the increasing trend of drinking at home, although some doctors claim that the base price is too low.

On beer duty, however, it appears pubs will have to dig into their own pockets again for the next round. The Treasury is certainly not buying it.