Trade talk: Budget 2014 reaction

Following the Chancellor’s decision to scrap the controversial alcohol duty escalator in yesterday’s Budget, we round up reaction to the news from some of the industry’s most prominent figures.

Rather than automatically increasing by 2% each year, duty on wine and spirits will now rise in line with inflation saving the industry an estimated £175 million in additional duty payments, according to the Wine and Spirit Trade Association (WSTA).

The decision follows a successful campaign, spearheaded by the Wine and Spirit Trade Association, along with the Scotch Whisky Association and The TaxPayers’ Alliance.

Since the alcohol duty escalator (ADE) was introduced in 2008, tax on wine has increased by 50% and by 44% on spirits which campaigners argued was costing the industry “vital jobs and unfairly hitting consumers in the pocket”.

As a result of the changes, wine duty is set to rise by RPI inflation (2.5%), instead of the expected 4.5%, and spirits duty and most ciders will be frozen altogether for at least this year.

The chancellor also announced a cut to beer duty of one pence per pint.

Scroll through to see how figures within the drinks industry have reacted to the news…

David Frost, chief executive, Scotch Whisky Association

“This show of support for distillers from the Coalition Government will be warmly welcomed across the Scotch Whisky industry. “We are delighted that the Chancellor and the Chief Secretary to the Treasury listened to our case for scrapping the unfair alcohol duty escalator and freezing whisky duty. It is a move that supports hard-pressed consumers, a major manufacturing and export industry and the wider hospitality sector. “This fairer tax treatment in the UK, the third biggest market for Scotch Whisky, also sends the right signal on excise policy to the governments of the 200 countries to which we export.  So its effects will be felt around the world.”

Miles Beale, chief executive, Wine and Spirit Trade Association

“The Chancellor’s decision to scrap the alcohol duty escalator a year early and freeze alcohol duty for spirits is fantastic news and will be widely welcomed by consumers and businesses. The move will help British pubs, bars, and restaurants up and down the country, and will boost jobs and investment in the great British drinks industry and in the hospitality sector more widely. “Independent economic research from Ernst and Young has found scrapping the escalator will boost the public finances by £230m and create 6,000 new jobs. While we would have liked to have seen a complete freeze on wine duty, this is a positive step and as such the WSTA applauds the Chancellor’s decision to scrap the escalator.”

Michael Saunders, managing director, Bibendum Wine Ltd

“I am delighted that the Government has listened to the WSTA’s Call Time on Duty Campaign and scrapped the Alcohol Duty Escalator  – and the coordination of the trade has been fantastic. Many congratulations to Miles Beale and the team.

“That said, the decision to increase wine duty in line with inflation is still disappointing and whilst we welcome the announcement to cut beer duty, the Chancellor’s claim that this will help pubs is misplaced. Nearly a fifth of all drinks sales in pubs are wine and this new increased duty rate will have a real impact on business.

With the duty escalator now a thing of the past, the Government now needs to move forward and engage with business, creating policies that are good for jobs and good for the economy.”

Brigid Simmonds, chief executive, British Beer and Pub Association

“This is fantastic news, and George Osborne is again the toast of Britain’s brewers, pubs and pub-goers. It will protect over 7,000 jobs over two years, mostly jobs of younger people in Britain’s pubs. “It also shows that the Government has understood our case, that taxes on British beer had become far too high, and action was long overdue. “I hope this becomes a trend in future budgets for this British-made, lower-strength drink.”

Mike Benner, chief executive, Campaign for Real Ale (CAMRA)

“CAMRA is delighted to see the Chancellor implementing an unprecedented second consecutive cut of a penny in beer duty. This is not only about keeping the price of a pint affordable in British pubs but helping an industry which has been in overall decline continue on its long road to recovery. CAMRA cares greatly about the future of the Great British pub and it is clear from this Budget announcement that the Government do too. “Keeping the price of a pint affordable is vital for the long-term health of the pub sector and CAMRA would hope this latest vote of confidence in British pubs will go some way to slowing the rate of closures, by encouraging more people to make use of their local this summer.”

Julian Grocock, chief executive, Society of Independent Brewers (SIBA)

“SIBA applauds the Chancellor’s decision to take another penny off the pint, following last year’s historic decision to scrap the unpopular escalator. It is good to see that this government believes in providing long-term support for the British brewing and pubs industry. “SIBA’s Budget submission to the Treasury this year was based on the very positive impact of the 2013 duty cut on the local brewing industry. Our members now feel more confident about the long-term prospects for their breweries, and are investing in them by buying new equipment, recruiting new staff or opening new pubs. “This evidence of an industry buoyed by the duty cut, which we presented to government both centrally and locally, through our members’ lobbying of their MPs, is one reason why we have been given what we asked for in this Budget – the ‘same again, please, George.’. We promise to return the Chancellor’s positive response by giving back more of the same from Britain’s local brewers: more investment in breweries, jobs and pubs. “It is particularly pleasing that, while duty concessions were given to other drinks, only beer, as our national drink, was rewarded with an actual cut in duty. We must also thank Andrew Griffiths MP, whose tireless work on behalf of British beer and brewing ensures that our arguments are heard at the highest level in government.”

Paul Schaafsma, general manager, Accolade Wines UK and Ireland

“The scrapping of the duty escalator is great news for the drinks industry in the UK. Accolade has been a firm supporter of the ‘Call Time On Duty’ campaign, and whilst we would have liked to have seen a complete freeze on wine duty, we are delighted by the Chancellor’s move and its implications for the trade and consumers. The removal of the duty escalator will enable us to work with our retail partners to ensure the consumer gets real value, because now HMRC are not taking a disproportionate and constantly increasing cut.”

Gillian Walters, sales and marketing director, Cobevco

“The removal of the duty escalator on alcohol is an important step for the industry. UK duty rates on wine are currently some of the highest in Europe which, in our view, only serves to penalise responsible drinkers, as well as producers and merchants. “This move has given the wine industry a great opportunity to pave the way for a return of producers that have been priced out of the UK in recent years.”

James Lowman, chief executive, Association of Convenience Stores

“We welcome the scrapping of the alcohol duty escalator and the decision to reduce beer duty by 1p, which will benefit consumers and reduce some of the pressure on local shops losing trade to the illegal market. However, there remains a significant illegal market in alcohol products, and we will continue to press for more focus on catching illegal sellers and tougher penalties once they are caught.” He added: “This budget builds on strong existing announcements on reducing national insurance contributions and business rate bills for local shops. that will come into force on the 6th April. “The proposed increase in the threshold for the annual investment allowance is a further incentive to business to invest. We know that over a quarter of independent shop owners currently have plans to invest in their shop and this measure will help them to do so.”

 Simon Cox, managing director, Molson Coors UK & Ireland

“This duty cut gives a much needed boost to our customers and the brewing industry, securing jobs and saving money for beer drinkers up and down the UK. This, and the scrapping of the duty escalator last year, is a very welcome and vital break, but there is still some way to go as Britons still pay an excessive amount in tax on beer compared with Europe.”

Andrew Cowan, country director, Diageo GB

“The Chancellor has today given a huge boost to one of Britain’s most successful industries. From Scotch whisky to London Gin, British spirits are admired and enjoyed around the world. In freeing the industry from an debilitating tax policy the Government has given a show of support for these quality products. That will benefit the industry not just at home but also help us as we fly the flag for British business across the world.”

Helen Dickinson, director general, British Retail Consortium

“Our customers will welcome the Chancellor’s focus on putting more money in their pockets through changing the tax thresholds, fuel duty and savings and pensions arrangements. The BRC’s projections demonstrate that whilst recovery is now a tangible trend, progress is still fragile and retail can play a strong role going forward provided that consumers feel confident enough to spend.” “As an industry that employs over one million people under 25, we applaud the Chancellor’s measures to support 100,000 more apprenticeships and the re-confirmation that he will scrap the jobs tax for under-21s. Retail offers young people fantastic career opportunities with great promotion prospects and our members will now be looking at ways to bring even more into our industry.” “There are around two million women working in retail because our industry offers flexibility as well as good career progression and so we are very pleased to see that more help with childcare costs will be available.”

Paul Bartlett, chair of the National Association of Cider Makers (NACM)

“We are very happy to toast George Osborne this evening with a delicious glass of cider. It is great news that the Chancellor has abandoned the duty escalator and frozen duty on cider this year in recognition of the important role that cider makers play in their local, rural communities as well as the impact on growers and cider makers from the winter storms and rain. “Responsible drinkers will be able to enjoy British cider as the cycle of continual above inflation increases is now broken. This common sense decision will be celebrated by nearly 500 producers across the country as it protects the investment they have made over many years to grow the industry and support the rural community – as well as supporting thousands of jobs. “As the investment cycle for our industry is measured in decades, we have a critical need for stability on duty and policy and we hope this decision signals a period of sustained support from Government for a great British success story.” He added: “Many cider makers have and will to continue to invest significantly in their businesses, hence the announcement on the Annual Investment Allowance is welcomed, as is the support UK manufacturers seeking to export. “UK cider makers account for over half of all cider produced in the world and British businesses are very active seeking to grow export markets, so this might present a terrific opportunity for producers and the UK economy.”

Gordon Johncox, managing director, Aston Manor Cider

“At Aston Manor we are very happy to toast George Osborne this evening with a delicious glass of Kingstone Press cider. “It is great news that the Chancellor has decided to freeze the duty on cider so that responsible drinkers are able to enjoy quality cider now the cycle of continual above inflation increases is broken. “This common sense decision sustains our confidence that we can deliver further growth in the business with the ambitious investment plans we have – plans that have already transformed Aston Manor Cider in the last few years. “Our investment cycle is measured in decades, hence we have a critical need for stability on duty and policy and we hope this decision signals a period of sustained support from Government for a great British success story, and Aston Manor wants to play a full part in that.”