Budget 2016: Trade and analysts react

The British Chancellor George Osborne has frozen taxes on beer, cider and spirits in his 2016 budget, while wine was overlooked – so could he have done more?

George Osborne, the UK’s Chancellor of the Exchequer, delivered his 2016 budget today (Photo: Flickr)

Mr Osborne used his 2016 budget, which was unveiled today (16 March), to halt the rise in beer duty.

The levy was meant go up this year in line with inflation, adding to the price of a pint of beer.

But today’s freeze means pints are 10p cheaper on average since 2013, when the Chancellor first scrapped the duty escalator – a tool that saw beer taxes rise above inflation.

Mr Osborne has now cut beer taxes in all of his last four budgets.

Duty on spirits has also been frozen as part of the 2016 budget, while the duty on other alcohol, i.e wine, will continue to rise in line with inflation.

But could that Chancellor have gone further to help the British alcohol industry? Here, we present the views from some of the biggest names in drinks.

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Campaign for Real Ale (Camra)

Camra chief executive Tim Page (Photo: Camra)

The Chancellor’s decision not to cut beer tax is a missed opportunity, according to the Campaign for Real Ale. Camra, however, welcomed reductions in stamp duty and business rates will help to keep small community pubs open.

By failing to cut beer tax for a fourth year in a row, the Chancellor has missed an opportunity to support the ongoing revival of brewing in the UK.

Camra had been pushing for a cut in beer tax which would have prompted additional investment in the industry, protected jobs and importantly, supported stable prices for customers.

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.”

The Wine and Spirit Trade Association

WSTA chief executive Miles Beale (Photo: WSTA)

Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “We are pleased with the Chancellor’s decision to freeze spirits duty. The 26m spirits consumers will raise a glass to that tonight!

“However, we are disappointed that that 30m wine consumers have been singled out for a duty rise. The freeze in wine duty in 2015 has resulted in £118m extra in revenue to the Treasury in the last 10 months, up 4%, which makes it very unfair that wine has been penalised.

“We also deeply regret that the Government has missed this important opportunity to support the emerging English wine industry, which is a real home-grown success story that needs nurturing rather than being hit by another unfair tax increase.

“The failure to rebalance this unfair tax burden on the wine industry will stifle the industry’s ability to invest, to sustain the 270,000 jobs it currently supports and to help British pubs, bars and restaurants where – at £4bn p.a. it makes a significant and fast growing contribution.”

British Beer and Pub Association

BBPA chief executive Brigid Simmonds (Photo: BBPA)

Commenting on the freeze in beer duty and business rates support for pubs announced in today’s Budget, BBPA Chief Executive Brigid Simmonds said: “This freeze means that beer duty is now 17% 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% of pubs 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.”

Scotch Whisky Association

SWA chief executive David Frost (Photo: SWA)

The Scotch Whisky Association (SWA) has welcomed the UK Government’s decision to freeze excise duty on spirits in today’s Budget. But it says a cut would have provided a bigger boost for consumers, a vital home-grown industry and public finances:

“As a result of today’s freeze, taxes (VAT and excise duty) remain at 76%, a level that three quarters of the British public believe is too high. The excise duty on a 70cl bottle of Scotch at the average price of £13 is £7.59 and the total tax burden is £9.91.

“Last year’s 2% cut in excise helped boost revenue from spirits for the Treasury by £102 million and the Scotch Whisky Association had argued that George Osborne should do the same this year to help the public finances, a home-grown industry and consumers.

“Despite the Government opting for a freeze rather than a cut the SWA says that Scotch Whisky will remain one of the UK’s most vital industries, supporting more than 40,000 jobs across the UK. It will also continue to be one of the UK’s biggest exports. Without the success of Scotch, the UK’s trade deficit would be 11% larger.”

David Frost, Scotch Whisky Association chief executive, said: “We welcome the freeze in excise duty on spirits.  We hope that this will sustain continued growth in the UK market for Scotch Whisky and thus help improve the public finances.  But tax is still 76% of the price of an average bottle of Scotch and the majority of the British public think that is unfairly high. We will continue to call for fairer taxation of Scotch, a vital UK industry, and we urge duty reductions in future years.”

Society of Independent Brewers (SIBA)

Mike Benner, managing director, SIBA (Photo: SIBA)

Mike Benner, managing director of the Society of Independent Brewers, said: “It’s very good news for the UK’s independent craft brewers that the Chancellor has frozen beer duty.

“The end of the duty escalator and three cuts in beer duty since 2013 have helped to revitalise British beer and around 300 new craft breweries have opened since 2013 bringing thousands of new local beers for consumers to enjoy.

“Our members are typically confident about the future of their businesses and this move will help reinforce that and encourage greater investment.”

Diageo

Andrew Cowan, managing director, Diageo Great Britain, said: “Scotch, as a home grown industry, flies the flag for the UK abroad and the alcohol industry as a whole generates billions for the UK economy.

“This year’s freeze on beer and spirits will help to continue this. We have already seen the positive impact that last year’s duty cut had on industries such as Scotch whisky  and so tonight, people across the nation will once again raise a toast to the Chancellor.”

Heineken UK

David Forde, managing director of Heineken UK

David Forde, UK managing director of Heineken, 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.”

Molson Coors UK & Ireland

Molson Coors UK & Ireland MD Frederic Landtmeters

Frederic Landtmeters, managing director of Molson Coors UK & Ireland, said: “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.”

Pernod Ricard

Dennis O’Flynn, managing director, Pernod Ricard UK

Denis O’Flynn, managing director, Pernod Ricard UK, says: “We welcome the Chancellor’s announcement today that he is continuing his support for the UK spirits industry by freezing spirits duty.

“This is good news for the spirits industry and for spirits consumers.  As the Chancellor stated, he recognises the already heavy tax burden that is borne by spirits in the UK.

“As one of the major wine suppliers in the UK, we regret that the Chancellor has increased duty on wine.”

KPMG

Commenting on the announcement that the Chancellor has frozen taxes on beer and cider, Will Hawkley, head of leisure at KPMG, said: “This is a welcome move for the industry which is facing increasing costs in other areas particularly around the National Living Wage.

“With increases to the personal tax allowance, a further freeze on fuel duty and a rise in the threshold for higher income tax, consumers will have increased disposable income which could really benefit the pub and restaurant industry if they are able to capitalise on this.

“With the additional announcement that the threshold for business rates will be more than doubled for small businesses, independent publicans and restauranteurs will see this as a step in the right direction, but may have wished for more.”