A freeze on beer and cider duty and a boost to small business rate relief have been announced by Chancellor George Osborne during his 2016 Budget announcement this afternoon.
Osborne announced that beer and cider duty is to be frozen, despite a campaign by the beer and pub industry for a further 1p reduction.
The brewing and pub industry issued a final plea to the Chancellor ahead of today’s Budget, earlier this week, saying three successive cuts to beer duty had boosted 'investment and confidence' in the industry. Back in January Nigel Evans MP claimed that 19,000 jobs had been generated, alongside £1bn in investment.
There was mixed reaction to the announcement from the trade. British Beer and Pub Association (BBPA) chief executive Brigid Simmonds said: '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.'
Simmonds added: '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.'
Society of Independent Brewers (SIBA) managing director commented: '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.'
Osborne also announced that duty on whisky is to be frozen, while other alcohol duties will rise in line with inflation.
'We welcome the freeze in excise duty on spirits,' said Scotch Whisky Association (SWA) chief executive David Frost. '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.'
Andrew Cowan, Diageo Great Britain managing director, 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.'
Small business rate relief
The Chancellor’s decision that the small business rate relief threshold will be raised to £15,000 from £6,000 has been welcomed. During the announcement Osborne claimed: 'This is a Budget for small businesses… This is a Conservative government that is on your side.' The government says around 6,000 small businesses will pay no rates, and 250,000 will have their rates cut from April 2017.
The BBPA estimates that around 75% of pubs will benefit from the changes, with a pub on a rateable value of £50,000 saving £625 per year, from April 2017, and pubs with rateable value of less than £12,000 paying no business rates at all.
However, ALMR chief executive Kate Nicholls said more needed to be done to reform business rates, which she claims unfairly burden pubs.
'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,' she said.
'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.'
In a surprise move, Osborne also announced that he would be implementing a sugar tax on soft drinks which will come into force in two years’ time. He said he hopes the measure will raise around £520m which will be used to support school sports.
The ALMR's Nicholls said: '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.'