Budget Decision 2018
On the 29th October 2018, the Chancellor listened to all those 116,000 who signed the campaign and announced a beer duty freeze. This is a positive move and shows that the Government are listening as well as acknowledging the social & economic importance of local pubs. It is expected that this decision will protect over 3,000 jobs.
Although this is a positive step, the Government still has RPI linked increases to Beer Duty next year and subsequent years so the Long Live The Local campaign continues to ensure the freeze isn’t a one-off.
UK Beer Duty is 12 times more of that in Spain or Germany!
A British Institution
Pubs have been a constant in British life for generations, and are now one of the few remaining truly open public spaces. They have been at the heart of our communities since they first opened their doors, and even their name, pub, is shorthand for ‘public house’.
They have deservedly earned a reputation as a British institution, both in what they offer us, the pub goers, and what they do for Britain as a whole. As an industry, British beer and pubs are a success story to be proud of. Combined, they contribute £23bn towards UK GDP every year and support over 900,000 jobs. 44% of those jobs are held by 16-24 year olds, which means they continue to provide vital job opportunities for young people.
They do this by providing something of undeniable value to the people of Britain and all those who visit our shores. They are far more than just a place to go for a pint. They are a space where class divides, generational differences and geographical rivalries melt away. They are the home of the beer garden. For every Michelin starred gastropub pushing the boundaries of British cooking, there’s a curry club or pie of the week. They are the home of sport, where else would you rather be if you can’t be at the game? Countless bands and singers have taken their first musical steps in backroom bars and weekly open mic nights. They are the constant hosts of birthdays, weddings, wakes, weekly catch ups, send offs & reunions.
But also, they are a great place to have a pint, and catch up with family, friends and other locals.
The Pub Industry Supports Nearly 900,000 Jobs Of Which 44% Are Held By 16 – 24 Year Olds.
Why Cut Beer Tax?
The simple answer; British beer is overtaxed.
Beer Duty (tax) in Britain is three times the EU average. The government collects £3.5 billion every year in Beer Duty, as well as almost £10 billion in other taxes on pubs and brewers. Today one in every three pounds spent in pubs goes to the taxman.
Along with Business rates and VAT, Beer Duty is putting pubs under enormous pressure; every day pubs are closing their doors for good.
And it’s about to get worse.
The industry needs a cut in Beer Duty, but the government is planning an increase. Beer Duty is now linked to RPI and that means it’s likely that Beer Duty will increase by at least 3% at the next Budget and every year for the foreseeable future.
The last time Beer Duty increased year on year was between 2008 and 2013 when the government put a Beer Duty escalator in place. The impact on the beer and pub sector was catastrophic, within 5 years there was a 24% decline in beer sales, 5,000 pubs closed and 58,000 people lost their jobs.
1 in 3 pounds spent in pubs goes straight to the Taxman … That is a whopping £140,000 per pub!
The Pressures Our Pubs Face
Despite serving the country for generations, our pubs are under threat from a range of pressures, and right now they are closing at a rate of 3 per day. The three main taxes pubs face are Beer Duty, Business Rates and VAT.
Beer duty is a tax paid when producing and selling beer, and is calculated based on the strength of the alcohol. Beer duty has increased by 60% over the last 17 years and now the UK has one of the highest rates of duty in Europe. With seven in every ten alcoholic drinks served in pubs being a beer, Beer Duty increases have a big impact on pubs and it’s set to rise every year for the foreseeable future; as it is linked to the Retail Price Index (RPI) which all but guarantees annual increases.
Business rates are taxes paid on non-residential properties like shops, offices, factories, and pubs. Rates are generally calculated based on a property’s rental value, usually on a square footage basis. However for pubs it is a calculation based on ‘fair maintainable trade’ as determined by an independent assessor.
The way the business rates system works has a disproportionate impact on pubs compared to other types of business (e.g. on-line businesses), the average pub today pays a business rates bill of £15,000 meaning around 4% of it’s turnover is paid in Business Rates alone.
Following recognition of the unfair burden faced by pubs, a new pub-specific relief for smaller pubs was introduced in 2017 in the form of £1,000 of their annual tax bill, but this is set to end in March 2019, further increasing the pressure.
VAT is a tax which is added to most goods in the UK and has a flat rate of 20%. Pubs, along with other licensed venues such as restaurants and bars, have to pay VAT on all food and drink they sell. This is not consistent with other food outlets, as food sold through supermarkets, convenience stores and takeaways (including cafes) does not pay VAT on most food products.
British beer drinkers pay up to 12 times more beer duty than those in other EU countries.
How You Can Help?
By signing the petition, you are asking the government to cut beer duty.
Sign the petition here!
Writing to your local MP also puts the issue on their agenda and ensures there is support within parliament.
All the above information has been taken from the Long Live The Local campaign, which is backed by Britain’s Beer Alliance.
Britain’s Beer Alliance was formed in 2014 to enhance the overall reputation of beer and pubs, help support category growth and to encourage collaboration across the industry. Their previous campaign ‘There’s a Beer for That’ ran between November 2014 and March 2018, and took on the challenge of changing perceptions of beer across the UK.
To learn more, please click here.