In his final budget before the General Election Chancellor Jeremy Hunt unveiled a raft of measures that the government said would lower taxes, deliver more investment and also better public services. Unfortunately the opportunity to help brewing and wider hospitality was a chance to be taken but a chance missed.

Described as a ‘Budget for Long Term Growth’, the UK Government said the latest Budget sticks to their plan of delivering lower taxes, better public services and more investment, while increasing size of economy by 0.2% in 2028-29 and meeting fiscal rules – taking the long-term decisions needed to build a brighter future.

With the independent Office for Budget Responsibility (OBR) confirming inflation is set to fall to target a year earlier than previously expected, wages rising consistently and the economy outperforming European neighbours, the Chancellor said he would stick to the plan to improve living standards by rewarding work and growing the economy. 

Of, understandably, interest to those in the world of beer, the six-month alcohol duty freeze announced at Autumn Statement will be extended until 1 February 2025. 

This, the Government said, would save consumers “2p on a pint of beer, 1p on a pint of cider, 10p on a bottle of wine and 33p on a bottle of spirit compared to if the planned rise had gone ahead. This will benefit 38,000 pubs across the UK, while reducing inflation this year,” they said. 

Other points of note were the decision to build on the 2 percentage point cut to Employee National Insurance at Autumn Statement, Hunt announced a second 2p cut from 10% to 8% from April. Taken together with the cut to Employee National Insurance at Autumn Statement, this slashes the main rate of Employee NICs by a third and means, they explained, that the average worker earning £35,400 a year will be over £900 better off this year.

A cut in VAT was always unlikely, that much is probably true, but the positive impact felt by a temporary freeze in duty is unlikely to felt but the hospitality industry – breweries and their customers – it is apparently designed to help.

“Whilst the extension to the freeze in beer duty is welcome, it will do nothing to help pubs, the operators of which are really feeling the pinch in the current market, explains Andy Parker, the award-winning founder of Elusive Brewing.

“High energy costs, supplier price increases, looming business rates increases and the cost of living crisis are sadly creating a perfect storm of challenging trading conditions. Sadly I can see many more pubs closing, which in turn squeezes us as suppliers.”

Luci Clayton-Jones and Mike Clayton-Jones, the founders of Double-Barrelled in nearby Reading, Berkshire, echoed this. 

“An extension to the freeze on alcohol duty is obviously welcome over a rise in duty rates, but crucially this is not a cut, when we have one of the highest, if not the highest alcohol duty rates in the world and so will not reflect in a reduction of costs for breweries – as a result no reduction in outgoings for publicans or drinkers either,” they said. “It is disappointing to not have seen any cut in VAT rates that would have had a far greater positive impact for hospitality-led businesses.”

Whilst the extension to the freeze in beer duty is welcome, it will do nothing to help pubs, the operators of which are really feeling the pinch in the current market.

Andy Parker

Darron Anley, the founder of Finchampstead-based Siren Craft Brew, which will open a new venue in Reading this year, said the Budget was “not even touching the margins of anything useful for the country”.  

“The definition of insanity is doing the same thing and expecting different results. The government tried a 2p cut in NI in the last budget and got no political capital out of it, why try it again?” he said.

“But on an industry-specific point, a hospitality vat reduction is what was required to stave of hundreds of business closures in what is a huge industry sector for the UK.  That and business rates.  A freeze in alcohol duty won’t help the pubs, bars and restaurants that are our customers.” 

And Jordan Childs, the CPO of no-and-low brewery brand Mash Gang says that while a freeze until 2025 will certainly be welcome news for many pubs and taprooms, it does “little to offset the bitter memory of energy gouging which was the final nail in the coffin for many struggling small businesses, and a disgusting windfall for energy giants”. 

He says: “Given the last few years, I’ll settle for ‘it’s not getting any worse’. I believe this summer is going to be the best we have seen since 2019 through grit determination and persistence, British pubs keep the dream alive. Drink more cask in 2024!”

In Norfolk David Holliday, the co-founder and co-owner of Moon Gazer Ales at The Norfolk Brewhouse, added: “Speaking financially not politically but the Budget did absolutely nothing for hospitality and no by not cutting VAT there was such a missed opportunity for a sector which does and can contribute so much to the economy.

“The hospitality sector is still recovering from the perfect storm of enforced shutdowns during Covid followed by massive increases in energy costs and all input costs from food cost to staff costs including the increase in living wage.

“The resilience of the sector is amazing as against all the odds it battles to keep cost down and customer’s coming in  – but that is not sustainable and a recent survey showed that over 50% of hospitality have exhausted all their cash reserves and have less than 3 months reserves. 

“This simply isn’t sustainable and the recent increase in closures is only set to continue both for financial reasons and also personal reasons as there is only so much people can take!”

Holliday added: The duty freeze is welcome but this is not a cut. It’s a real kick in the teeth to see the HMRC show on social media that the freeze will cut our costs as a brewery – it won’t – it will just not put them up. If people are not going to help you then we have to live with that – but at least let you down honestly and don’t lie – that’s the kick in the teeth. We will keep campaigning  for the meaningful support the sector needs and deserves.”

The definition of insanity is doing the same thing and expecting different results.

Darron Anley

From an industry body perspective, SIBA’s chief executive Andy Slee says that the Government’s continued support for independent breweries and community pubs through an extended beer duty freeze is a welcome announcement that will help keep the price of a pint from rising, and that the National Insurance cuts will also put more money into people’s pockets which is essential for encouraging spending in pubs and hospitality.

He adds: “However nothing has been done to address the heavy Covid debt the sector still carries, and despite pubs and independent breweries being vital to local communities they have received no direct support in the Spring Budget – with a missed opportunity to increase the Draught Relief to 20% or more which could have boosted our hospitality sector.

“Between them SIBA members run over 2000 pubs, bars and brewery taprooms, making a significant contribution to the local economy and community well-being. We are disappointed that nothing specific has been done to help alleviate the cost tsunami facing our much loved breweries and pubs in the months ahead.”

And CAMRA Chairman Nik Antona adds: “The Budget was a missed opportunity to show ‘backing for the Great British pub’ by significantly cutting tax on draught beer and cider served in pubs. However, freezing alcohol duty until February 2024 will be welcomed by consumer and breweries, helping mitigate an additional hike in costs to be passed on to pubs and pub-goers. 

“Making duty on draught beer and cider significantly lower would promote drinking in the regulated setting of a community local and help small and independent producers who sell mainly into pubs and taprooms to compete against the global brewing giants and the likes of supermarket alcohol. CAMRA will continue to campaign for the Treasury and all political parties to back our sensible ask of making tax on pints in pubs 20% lower than the general duty rate. 

“The Chancellor’s announcement that the VAT registration threshold for small businesses will be increased will not benefit the majority of pubs, breweries or cider producers. Cutting VAT on all sales in the hospitality sector would have been a simple way to support consumers and beer and pub businesses in all parts of the UK – helping to keep the nation’s pubs, social clubs and breweries alive and thriving at the heart of communities and local economies. 

“The Chancellor should still consider cutting VAT for these businesses to ease the significant financial burdens on the sector and help to reduce the rate of pub and brewery closures which deprive consumers of community pubs and choice of local beers.” 

Phil Halls, co-founder of Grain Brewery in Norfolk, concludes: “A freeze on beer duty is welcome but does nothing to solve the problems faced by today’s small brewers and the pub and bar industry.

“There have been calls for a cut in VAT for hospitality, which would be welcome but unlikely, and again does not confront the real problems we are facing. Going down the pub is an expensive hobby.

“The core problem is that brewers have been massively squeezed on their margins because of high ingredients cost, high energy costs and the knock on effect these have on other materials, at the same time as an increase in minimum wage. Then we sell to pubs whose margins have similarly been squeezed, and neither pubs nor brewers are selling beer at the price it needs to be to earn a fair wage.

“And pub goers have had their household budgets slashed, resulting in less ability to buy a pint. Inflation is down to 4%, but that 4% is still an increase on top of already unaffordable prices.

Until the fundamental costs of property, energy, and food are brought under control and become fair and affordable, anything else is spin. Our politicians should start by giving frank and honest information to us.” 

Photo Credit: HM Treasury