On 22/03/16 by David Sheen (Policy Manager - Economy & Environment)
The 2016 Budget contained a vast range of measures that will affect the day-to-day running of a brewery or a pub. We have produced a summary of the full list of measures, which is available here. An area that has been mostly overlooked is proposed changes to energy efficiency tax and regulation.
The Government announced a consultation into the energy efficiency policy landscape at the Summer Budget in 2015. The BBPA alone responded to this on behalf of the brewing and hospitality industry with four key points.
Simplification of reporting - energy policy has become very complicated and business is expected to make a number of submissions to various Government agencies, in addition to their own internal monitoring and reporting commitments. The BBPA supported a move towards a single data return.
Continuation of Climate Change Agreements - brewing is an energy intensive process that can be heavily affected by energy taxation. To ensure the competitiveness of the British brewing sector it was essential that CCAs, which provide substantial discounts on the Climate Change Levy (CCL), was continued. For electricity this is a 90% discount and for gas it is 65%. Energy taxation increases could feed through to the price of the final product.
Abolition of Carbon Reduction Commitment - the CRC is a burdensome scheme for business that fails to deliver equivalent energy and carbon savings. The BBPA called for this to be abolished.
Protection for small businesses from increased taxation - the Government made clear that any revenue that was lost through the abolition of the CRC would need to be recouped through an increase in the overall rate of CCL. This would shift the burden of energy taxation from large businesses to small businesses who had hitherto been unaffected by CRC.
The 2016 Budget delivered on three of our four proposals. Overall this is a hugely positive outcome but there remains major uncertainty.
Reporting on energy use will be simplified. CCAs will be continued, protecting the UK brewing industry, which provides 85 per cent of the beer we drink in this country. And the irksome Carbon Reduction Commitment has been abolished, from 2019.
The fly in the ointment remains the lack of a commitment to protect small businesses like pubs from the Government's CRC reclaim. The headline rate of CCL will increase substantially from 2019. The rate for electricity will increase by 53 per cent and by 76 per cent for gas. This could affect many community pubs who we intend to fight to protect.
The Government has said they will continue the small business exemption from CCL but this is at fairly low level. Pubs pay no CCL on electricity if they use less than 1,000 kWh of electricity each month, and no gas levy if this is below 4,397 kWh per month. The BBPA strongly believes that this level needs to be increased to protect pubs from these major tax increases. But there should also be an onus on small pubs to take measures to reduce energy usage, not least because it contributes to the bottom line.
In light of these measures, and last year's Energy Savings Opportunity Scheme (ESOS) audits, the BBPA will be holding a Pub Industry Energy Symposium on 5th May at the DoubleTree Hilton West End in London. This will include a presentation from senior officials working on these reforms, the outputs from the ESOS audits and the launch of new best practice support for pubs.
Energy is going to be a colossal issue for the UK and this will affect the bottom line of brewers and pubs. The BBPA will continue to lobby to reduce the tax impact on the industry whilst promoting best practice to make the sector more sustainable. Join us on the 5th May to find out how.
The BBPA and its members are committed to improving the impact of the sector on the environment. We have set out the considerable efforts already made by the sector and our future aims in our environmental commitment, Brewing Green.
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On 09/03/16 by Tom Pratt (Campaigns and Communications Officer)
Despite three successive duty cuts, British beer duty is still the second highest in Europe. By taking a look at the relationship between beer, brewing and employment, we can see why a fourth successive duty cut in the March 16th Budget is so vital to protecting the beer and pub sector, and the employment opportunities the sector affords so many.
In 2013, the Government abolished the beer duty escalator, and cut duty by 1p a pint. Further 1p cuts followed in both 2014 and 2015, and this historic hat-trick has had a hugely positive impact on beer and pub jobs - It is estimated that employment is 19,000 higher than it would have been had the Government stuck to its previous plans to raise beer duty.
Duty cuts have helped keep the price of a pint down, providing a boost to beer sales and helping to keep more pubs across Britain open.
It’s worth noting that 82% of all beer made in Britain is sold in this country, with one job in brewing creating one further job in agriculture, one in the supply chain, one in retail and 18 jobs in pubs.
This last figure is particularly striking, and underlines the special relationship beer enjoys with the sector. Pubs continue to rely heavily on beer, as it accounts for around seven in every ten drinks sold in pubs, with draught beer very much the preserve of the Great British pub.
Many jobs in the sector go to young people, with over 44 per cent of those currently employed across beer and pubs under the age of 25. On top of this, the hospitality sector has created 165,000 apprenticeships in the last five years, with duty cuts playing a part in helping to stimulate this recent investment.
A further penny off a pint at Budget 2016 will boost employment by over 3,000 compared to the planned inflationary increase. This would keep up the momentum generated by three recent cuts in beer duty and provide valuable support to the beer and pub sector, and all those employed within it.
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On 04/03/16 by Tom Pratt (Campaigns and Communications Officer)
You may have seen a story in the Sun on Sunday, published last weekend, highlighting the ‘bevvy burden’ placed on British beer drinkers, taking their story from figures we’ve recently compiled on duty rates around Europe ahead of the Budget announcement on 16th March.
The headline speaks of Brits paying ‘13x more in beer tax than Germans’, yet our figures show that beer drinkers in Britain also pay more than those in Belgium, France and Spain. In fact, only the Government of Finland, charging 72p in duty for every pint, charges more on a 5% abv beer than the Treasury’s 52p per pint.
The full league table of EU duty rates is shown in the chart below. Even the EU average, of 17p, is three times lower than the British rate.
British drinkers in total are paying around 40% of all beer duty collected throughout the EU, whilst consuming only 12% of the beer.
These wide variations exist despite our successful work in helping to secure a hat-trick of beer duty cuts over the last three budgets.
Over 50 MPs have joined us in asking the Chancellor to #cutbeertax by leaving their ‘Message in a Barrel’ at a recent event in Parliament, urging the Chancellor to cut beer duty rates again, and others have shown their support by signing Early Day Motion 919.
The beer and pub sector supports almost 900,000 jobs, and contributes over £22bn to our GDP, figures that serve to underline why further cuts in beer duty are so vital in the forthcoming Budget.
A duty reduction on March 16th will be another step in the right direction in closing the gap with our European neighbours, but more importantly will help consumers and keep community pubs open.
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On 02/03/16 by Jim Cathcart (Policy Manager - Pub Operations)
As the majority of those in the trade will already know, pubwatches are voluntary groups set up by licensees working together to promote a safe drinking environment, in partnership with the police and the licencing authority.
This involves sharing best practice, banning known troublemakers and maintaining a good relationship between local pubs and enforcement officers – an approach that works, as an independent evaluation of pubwatch showed the vast majority of local authorities (76%), police (70%) and licensees (70%) believe a pubwatch contributes to a safer drinking environment in its local community. National Pubwatch is the voluntary body that supports existing pubwatches, provides guidance and assists in setting up new watches.
On to the conference, where following the welcome from National Pubwatch Chairman Steve Baker and the trade view from BII’s Nigel Williams (a veteran Sheffield licencee and more recently brewery owner) the attendees heard from David Crompton, Chief Constable of South Yorkshire police. Chief Constable Crompton highlighted the issues both police and the trade face in the night-time economy and the problems that can be caused by alcohol – but was unequivocal in his support for pubwatches as a key tool in assisting enforcement agencies and the trade generally in creating safe environments for people to socialise. He even went as far as to say that in his view, the work of National Pubwatch over the last 20 years had saved lives in the night-time economy. This was followed by annual awards for outstanding individuals who have supported pubwatches, for both licencee and police representatives.
The day continued with the break-out sessions, a hallmark of National Pubwatch conferences that really allows delegates to get close to current issues with key speakers and plenty of opportunity for questions, answers and debates. This year saw Nigel Connor, legal expert and JD Wetherspoon’s Company Secretary, tackle the complex but vital subject of data protection – a key consideration for all watches – and shed light on the law in this area. Barrister Gary Grant updated the conference on recent licencing developments all pub operators should be aware of, with key analysis of immigration changes to the licence regime.
The second break-out session from West Midlands Police focused on the dangers presented by so-called ‘legal highs’, and what licensees and door staff should be looking out for with regard to these psychoactive substances – which have differing effects and reactions from users. New drugs are evolving all the time, highlighting the importance of pubwatches in being a network that can share the latest information on this subject. Brian Arnott and his team gave an overview of the successful Street Pastors scheme; volunteers who patrol the late-night sector and help those who have had too much to drink, or are lost, or assist in defusing confrontational situations. National Pubwatch has recently financially supported the work of Street Pastors in Westminster, another example of partnership schemes working together which was further highlighted by the Local Alcohol Partnerships Group stand which showcased the work of National Pubwatch, the Portman Group, Best Bar None, PASS and others.
As it has done for the past thirteen years, the National Pubwatch conference provided in-depth discussion sessions with leading experts, a chance for licensees to meet National Pubwatch representatives and ask questions on the day-to-day practicalities of running a pubwatch, and a forum for the trade, police, local authorities and others to network on common issues. The unique nature and importance of the conference was highlighted by a capacity attendance of almost 200 delegates. The BBPA has been a supporter and promoter of pubwatches and National Pubwatch for a number of years, and we urge members to support National Pubwatch and promote this scheme to their lessees, tenants and managers – especially those new to the trade.
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On 26/02/16 by David Sheen (Policy Manager - Economy & Environment)
Ahead of Budget 2016, the BBPA has been working night and day to persuade the Chancellor to cut duty on beer, the core product of the great British pub, the drink that makes up seven in ten sales.
However, there are a range of other taxes that affect pubs, from business rates to employment and energy tax, where we work hard for a fairer burden on our sector.
Beyond beer duty, business rates are a very high priority
Business rates in their current form are hugely unfair to pubs. Analysis from the BBPA shows that pubs pay 2.8 per cent of business rates but generate around 0.5 per cent of business turnover. This equates to an overpayment of £500 million, relative to turnover, for the sector, as we pointed out in our response to the Government's review of business rates in the summer of 2015.
The iniquity of the system was further laid bare in a recent analysis of the tax burden on the pub commissioned by BBPA from Oxford Economics. This showed that pubs were the second highest taxed, per pound of turnover, out of 69 sectors surveyed.
There are a number of reasons for this discrepancy - many sectors receive major discounts, such as agriculture and charities - but the main reason is that pubs are not very ‘property efficient’ compared to shops, for example. There is no reason why they should be; pubs provide a valuable community service, they allow people to come and enjoy their amenities for a relatively low cost; the price of a pint.
Business rates are a major cost for pubs and therefore a major concern for the BBPA. So what are we doing about it? There are a number of areas where we have been focused on reducing this burden, broadly broken down into review and reform, revaluation and final bills & reliefs.
Review and reform
The Government announced in the Autumn Statement 2014 that there would be a fundamental review into how business rates operate in the UK. At their simplest level, business rates are a tax on the annual rental value of a property, using a five-yearly assessment of that rental value. This basis of taxation has to apply across all business types regardless of the model under which they operate.
The review looked at a number of issues concerning how business rates operate. Issues that received the most attention were the lengthy intervals between revaluations and the underlying basis of rates.
The first point had been exacerbated by a Government decision to extend the time between revaluations from five to seven years, meaning property valuations had become out of sync with current economic conditions (2008 compared with 2015).
The BBPA considered that more frequent revaluations could have some benefits but also added uncertainty. A sudden upturn in trading conditions could lead to a sharp annual increase in your rates bill. Whilst being sympathetic to a shortened revaluation period, we did not believe this would be a fundamental improvement.
The second area was more fundamental. How do you levy a business tax that applies across all sectors?
The British Retail Consortium undertook a major piece of research which looked at four different mechanisms for changing business rates in its Road to Reform report. These included moving to a different basis, such as an energy tax; providing a discount on employment; rewarding successful businesses through corporation tax reform; or modernising the current system.
The BBPA examined all of these options. We felt that a modernisation of the current system was preferable, as the others presented greater risks to the sector. However we were very clear in our response that taxing businesses on property remained unfair to businesses such as pubs and therefore a system of reliefs was necessary to alleviate this burden.
The research that the BBPA carried out into how unfairly pubs are treated under the current rates regime is a landmark for the sector. It ensures that the pub sector has substantial evidence to support our case for reducing the burden of business rates.
As part of wider reforms the Government has already announced plans to devolve rate-setting power to local authorities. At the Conservative party conference local authorities were told they would be able to reduce business rates to stimulate growth. It was also announced that areas with a directly elected mayor could increase rates by up to 2p in the pound with the support of the business community for infrastructure projects. We await further details, but there needs to be clear support for existing businesses, including through existing reliefs.
The process for appealing business rates is also under review and is an area where the BBPA has been leading calls for change. The current appeals process causes huge delays to businesses making representations for changes to their rates. The BBPA has informed the Government's response through the consultation process and is confident that the new regime will be move favourable to publicans, when compared with the current unsatisfactory system. The review is due to publish its findings in Budget 2016.
Business rates bills are based on the rateable value (RV) of a property. This is an estimate of the annual cost of renting that property. This is calculated in different ways by the Valuation Office Agency (VOA) and its devolved counterparts. These were last set in April 2010, based on the rental value at April 2008. Essentially, every rates bill is dependent on how much it cost the business to rent the building they operate from in April 2008.
The latest revaluation of business property is currently underway. This will set a new RV from April 2017, based upon the rental value as at April 2015. This will have a major impact on the rates bills of pubs across the country. The BBPA has had a constructive dialogue with the VOA, with expert analysis and input from surveyors with an in-depth knowledge of the pub industry to help ensure a new basis for rateable values that better reflects the pub landscape of 2015 than of 2008.
Importantly, this will deliver much lower rateable values than the VOA had originally been looking at. This should be a positive first step from 1st April 2017 with pubs receiving more favourable RVs than would have been the case - by as much as 15 per cent on some calculations. The devil will of course be in the detail, but we feel this is a great result that works well for ratepayers.
New RVs are expected to be made available online on 1st October 2016 (and not sent by post as in previous years). They should give an indication of what the rates bill for the next five years will be.
Final bills and reliefs
The two issues of rates and reliefs relate to future work, although neither is too far off.
The final business rates bill is a combination of the RV, the multiplier (the announced tax rate per pound of RV) and any reliefs available.
The BBPA has led and coordinated the campaign on these critical elements on behalf of the pub sector and its wider supply chain, under the banner of Better Rates for Pubs.
Over the last few years the Better Rates for Pubs campaign has highlighted the burden that business rates place on pubs and proposed measures to lighten the load.
This has seen some real success, with a cap on the overall multiplier, extensions to Small Business Rate Relief (SBBR) and the introduction of Retail Relief. The latter two were targeted measures that have removed cost from the bottom line of struggling pub businesses. These have been achieved by working in partnership with others in the retail sector.
In the latest campaign, ahead of the Autumn Statement 2015, there was mixed success as Government tightened its belt. SBRR was extended for a further year but Retail Relief was discontinued. The overall rate was increased by inflation, which fortunately was at a very low level.
This loss of Retail Relief was hard to bear. It was a highly targeted measure that supported pubs and other businesses that were disadvantaged by the current regime. At the time, our Chief Executive Brigid Simmonds commented that this was “effectively a £1,500 tax increase for the majority of pubs,” adding £46 million to pubs’ rates bills. In its submission to Treasury ahead of Budget 2016 the BBPA has called for Retail Relief to be reinstated, at least until the revaluation in 2017.
What does the future hold?
These are uncertain times for those that pay business rates, and particularly those that are unfairly burdened, as pubs undoubtedly are. Pubs need to be aware of:
• The anticipated loss of Retail Relief from April 2016.
• The revaluation from 1st April 2017 - it will cause upheaval and will mean higher costs for some, particularly those that have thrived
• The impact of devolution on rates - this will come from April 2017 in Wales and before 2020 in England - and could lead to higher rates where there is a devolved Mayor
• Potential abolition of national reliefs, such as Small Business Rate Relief
The BBPA believes the current business rates regime is profoundly unfair to pubs and will continue to fight for a better deal for British pubs in all of these areas. We have made representations to the Chancellor and his colleagues ahead of the forthcoming Budget, and will be campaigning hard to make sure the rates system does not undermine the great British pub sector and the 32 million who visit pubs each year.
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On 23/02/16 by Brigid Simmonds (Chief Executive)
KingstonFirst (in Kingston upon Thames), was the first Business Improvement District, set up in 2004. It now has 750 members who occupy 940 properties and pay a 1 per cent levy based on business rates. This raises about £800,000 for the BID and at the last vote, 81 per cent of businesses voted to support it.
Its main objective in its first two terms was to create a safe, clean and animated town centre which was well promoted and to drive down operational costs for its members, For the last six years, Kingstonfirst has delivered a number of services on behalf of the Local authority. Now, at a time when funding for local authorities is reducing and many are sharing services with other local authorities in areas such as human resources, waste management and social care, there is real scope for BIDs to add even more value.
Now in its third term, it’s taking a more innovative and commercial approach to shaping the town centre via even greater collaboration with more partners. Through combined buying power, KingstonFirst offers its members enormous savings on key business services, including utilities and waste management, providing a direct financial return on their levy investment.
But it is now looking beyond its core area to offer the same services to non-BID members at a charge – the more businesses in the buying group, the greater the savings.
They are also looking at how they can bring property owners, facilities management and investors together to market the right sites in Kingston and achieve the right mix. Using technology they can they track how and what shops customers are visiting and in time may help to market a particular site for a specific type of shop. They would be able to demonstrate demand for a particular type of retail store.
Kingstonfirst sees itself as the custodian of the town, the voice of business, a critical decision maker, a driving force and a credible contributor to the success of the town It is in no doubt about the importance of its relationship with the Council which it considers a critical partner.
Kingston has worked with its local university, with Telefonica which is based locally, and a range of other partners to consider how to attract more visitors to Kingston. Digital marketing is part of its mix. In 2014, it won the London category of the Great British High Streets competition for its innovation around the market square and the integration of the market with other retail outlets and range of historic buildings.
You would probably not think of Kingston upon Thames as a market town, but its daily market, with around 30 stalls, has an estimated annual turnover of £1.3m. It has popular night markets and visiting markets too, with the end of year highlight being its Christmas Market -vital ingredients in the recipe of this flourishing town centre.
Its evening (anything after 5pm) and night-time economy is thriving and is hugely important to their mix. It runs events, from dance festivals to street activated music, has an active Pubwatch, runs Best Bar None and support its street pastors.
It was quite interesting the other day listening to Deltic talking about their venue in Kingston being one for special occasions; their customers visit infrequently – once every two or three months. KingstonFirst is well aware that reputation is important. It works closely with its pubs, bars and nightclubs, recognises the need to provide for all ages and interests and wants to create a thriving town centre which all can enjoy.
As ever, local leadership is important and this is where the Great British High Streets Pledge works so well. National and local companies encouraging their managers to become involved in local high streets, to participate in the work of BIDs, town teams, and local partnerships. Both Business in the Community and British BIDs have shown that individual retail outlets benefit in terms of footfall and income through successful high streets.
Rather obvious you might think, so all a good reason to make contact with me and sign the pledge. All I need is a letter from you agreeing to support the pledge; “I pledge to use the leadership expertise, skills and resources of my business to help UK high streets achieve their full potential”.
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On 19/02/16 by Brigid Simmonds (Chief Executive)
As we move towards the Budget on 16th March, the BBPA team is very focused on our campaign for a cut in beer duty in the Budget, and my colleague Andy Tighe, has written about how much this benefits pubs.
Yet with such a large tax burden facing pubs, there are also many other reasons why the sector really needs another duty cut.
At the end of last year, the BBPA commissioned Oxford Economics to look at the total and average tax contribution of a British Pub. It concluded that over a third of pub costs go in tax, or on average £140,000 for every pub.
This makes for a grand total of £7.3 billion, as the pub sector total tax burden. In comparison with other sectors, the pub’s tax burden was the 26th largest, despite being only the 41st largest in terms of turnover.
Despite this big burden, we are facing a perfect storm, in terms of new business costs. We estimate that the introduction of the National Living Wage will cost the pub sector £35 million in 2016/17. We want to pay our staff more but it will be a challenge, particularly for small businesses, to achieve the productivity increases to cover these costs.
The Apprenticeship Levy will cost companies several million pounds in additional costs. New auto enrolment pensions will this year result in £34 million of new costs, with the abolition of retail relief adding a further £46 million.
The Apprenticeship Levy will cost companies several million pounds in additional costs. New auto enrolment pensions will this year result in £34 million of new costs, with the abolition of retail relief adding a further £46 million. The latter is a big financial blow, adding up to £1,500 to the bill of a community pub.
Overall, the BBPA estimates that new cost and tax pressures are the equivalent of a 3.4 per cent increase in beer duty, or an additional 1.6p per pint – enough reason on its own, to justify a beer duty cut in the Budget.
So, what are we asking for to help pubs deal with these new challenges? Alongside a penny off beer duty, we are asking for a review of the stakes and prizes for Category C gaming machines. We are asking the Government to look again at VAT for the hospitality sector. We are looking to the review of Business Rates to bring more companies into the scope of paying this tax and the reinstatement of Retail Relief, or reducing the burden on pubs which after all cannot be ‘virtual’! Whilst we support the abolition of the Carbon Reduction Commitment and simplification, we are concerned that the Climate Change Levy should not place too high a tax on small businesses like pubs.
With many pressures ahead, at the end of the day, we believe that a further cut for beer duty in the Budget 2016 is the most targeted and effective way to support the Great British pub but will continue to push Government for greater support on all of these issues.
There is still time to join our campaign; just visit www.beerandpubjobs.com and email your support to your local MP.
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On 17/02/16 by Brigid Simmonds (Chief Executive)
In a quiet country pub just after it opened at 11am on a Friday (Harvey’s, the Dorset in Lewes), I met Brian Arnott who leads on partnership development for the Ascension Trust who look after the growing number of Street Pastor schemes.
The Ascension Trust was formed in 1993 by a church leader in London as he sought to provide churches with the tools for participation in a 21st century society. It is now the governing body for eight church-led initiatives; the most well-known of which is street pastors. Street pastors now exist in 280 different places all over the UK. If you want to search and find one in a particular town or city, you can use this link
http://www.streetpastors.org/our-network/united-kingdom/ or the Ascension Trust website. http://www.ascensiontrust.org.uk
To be a street pastor, you have to be recommended by your local church (of any denomination), undertake eight days of training spread over a number of weeks, and have a CRB check (Disclosure & Baring Service). You also have to pay a one off fee of £300 for your training.
Funding comes from a range of sources; charities like the Jerusalem Trust (owned by Sainsbury’s), local authorities, police and of course local churches.
Why are Street Pastors of interest to us? Without doubt much of the emphasis on alcohol has moved away from the Department of Health and over to the Home Office which is working on a Modern Crime Prevention Strategy to be launched in March. In a chapter on alcohol, there is likely to be mention of ‘safe areas’ as alternatives to taking people who have drunk too much to A&E. There are currently 19 safe areas operating across the UK and three are funded by street pastors. Whilst alcohol consumption has fallen 19% since 2004, there is a still a perception of problems in our towns and city centres.
The BBPA and our members support a range of partnership schemes from Best Bar None to Business Improvement Districts and Pubwatch. We perhaps need to start adding street pastors to that list and here are a few ideas which Brian and I discussed on how individual companies can help:
- Make sure your local pubs know about a local street pastor scheme and make them welcome
- Consider offering a room in one of your pubs for street pastor training
- Where there is a local street pastor scheme, make sure you know how to get in touch, and if you need support, give them a call. They are all linked by mobile phone when out and about, and you can find the number on their site
- Consider advertising support for street pastors on your website (possible poster to be considered)
- Provide local funding
I think we have all been impressed with the work of street pastors and they are currently working out how much they save the public purse through their patrols, and the advice and help they offer. The police in Ealing believe that crime and assault cases go down 50% when they are on patrol and in Cullompton, Devon, local police highlighted a 14.3% reduction in crime after a year of a local scheme.
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On 15/02/16 by Andy Tighe (Policy Director)
With our campaign for another cut in beer duty now in full swing, it is great to be getting so much support across the trade, especially from pubs, which are receiving around 100,000 of our campaign posters and beer mats.
However, amidst all this support, we still see comments suggesting that ‘token’ one penny duty cuts don’t really help pubs; that brewers are putting up prices anyway, that it is supermarkets which benefit most – and the Government should focus on other tax reductions that would help pubs, such as business rates.
In total, 3.7 billion pints were sold in pubs and the wider on-trade, last year. That’s a lot of pennies - £37 million worth, in fact. If you add this up over the last three years and consider the increases that had been planned, that is a 10 pence per pint difference, or a £370 million per annum saving. We estimate that the effect on the price of a pint is around double this, when it comes to prices over the bar.
These are big numbers that have supported very significant additional investment in pubs since 2013, generating even greater returns. The Centre for Economic and Business Research (CEBR) estimates that 1,000 more pubs would have closed without this change in beer duty policy.
Of course, other costs in the industry can create inflationary pressures. However, Office of National Statistics inflation data shows that ex-factory gate prices for beer have fallen since Budget 2013 and price increases in pubs have been at their lowest since the 1980s, at just over 1% last year. This clearly demonstrates that the benefits of duty cuts are being passed on.
Supermarkets undoubtedly benefit from lower beer duty rates, but as we have seen over the last decade or so, pricing in supermarkets bears little correlation to beer duty changes. Between 2002 and 2013, beer duty went up 64%. Over this time, beer prices in pubs went up 48%, but prices in supermarkets went up just 8%.
After the beer duty cuts in 2013 and 2014, prices in supermarkets remained almost flat, but since June 2014, prices have fallen again, due to very aggressive pricing across all food and drink products as established supermarkets have responded to the growing threat from the discounters.
The key point is that if you are running a wet-led pub, with half of turnover coming from beer sales, a duty cut is more important to you than to a supermarket, where beer is just a small percentage of your total sales.
Of course, action on business rates and other taxes is also vital to reduce the huge overall tax burden pubs still face, and which accounts for almost £1 in every three spent in the pub. However these are also taxes borne by most other sectors and hence come with a much bigger price tag for the Treasury and are thus longer term objectives.
On a final note and perhaps most importantly of all, polling continues to show pub goers and the public in general are hugely supportive of lower beer taxes to keep a visit to the pub affordable and ultimately it is their view that matters most.
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