Wednesday, 20 March 2013

Doing your duty

Well, George Osborne today became the first Chancellor of the Exchequer to actually cut beer duty since Derick Heathcoat-Amory (pictured) in 1959. In a surprise move, he went well beyond what had been asked for by the campaign to scrap the escalator, and cut the main rate of beer duty by 2%, which supposedly will reduce the price of a pint at the bar by a penny.

This must be regarded as a major success for the campaign, which managed to put across a wider message about the role of pubs and the brewing industry in British society. However, given that the escalator remains for all other categories of alcoholic drinks, it is something of a triumph of special pleading. To some degree, it is a rebalancing exercise, as during the 1990s and 2000s there was more than one occasion when Ken Clarke and Gordon Brown froze spirits duty while continuing to increase that for beer. But it’s not going to do anything to stop the growing problems of alcohol smuggling and illegal distilling. Whisky and cider are substantial British industries as well as brewing, and they are going to be feeling somewhat badly done to today.

Osborne’s changes have also ended the strict proportionality of the different rates of beer duty that existed before, as the escalator has continued to be applied to the 25% addition for High Strength Beer Duty, and the duty on beers of 2.8% or under has been cut by 6%, not just 2%, so it is now less than half the standard duty. I can’t see that doing much to increase their appeal, as we’ve seen already that a tax break alone cannot create a demand for something for which there wasn’t one before.

It’s a relief, though, that the fears of many including myself that additional duties would be introduced on higher-strength beers and ciders have not been realised.

It’s also important not to see this as any kind of magic bullet for the pub trade. The anti-escalator campaign was at times guilty of overstating the negative impact of the escalator, when in reality there have been many other factors leading to a reduction of trade over the period it has been in force, not least of course the smoking ban. Five years of the escalator will have increased the price of a pint at the bar by maybe 10p. Of course that hasn’t helped, but it alone can’t really have been a make-or-break factor for many pubs.

So, while it might act to somewhat slow the rate of decline, it would be wrong to expect this to be the start of a turnaround as the 1959 cut proved to be.

And I’m awaiting the predictable howls of rage from the anti-drink lobby.

15 comments:

  1. I I were Belgium, I'd slap a massive tax on whisky and gin. That wouldn't be illegal, but it just so happens that vast majority is made in the UK. Tough on Suntory, but it would point out to Osborne that high strength beers include some of brewings' greatest creations.

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  2. A popular measure (indicated by the campaigners) that has little actual cost as the duty rate was becoming self defeating anyway. I can't spot a pasty tax lurking to unravel it.

    I shall go into a pub on sunday and ask why the price has not come down.

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  3. I'm not sure that the duty rises had become self-defeating yet. Although duty receipts had fallen below forecast due to falling consumption, it can't be said with any certainty that that was primarily caused by higher prices as opposed to wider economic and social factors.

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  4. I like the way you manage to avoid mentioning CAMRA there. Very well done.

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  5. Sensible post. The penny off is meaningless in the scheme of things. It won't persuade anyone to buy more beer or go to the pub more often. Even if price was directly linked to demand, it still only takes us back a month or two in terms of the price of a pint. Good headlines though.

    I suspect commodity and energy prices will put much more than that on the price of a pint in the next year, so probably a good time to kill the escalator--they'll more than claw it back in VAT anyway.

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  6. I’m awaiting the predictable howls of rage from the anti-drink lobby

    Not all bad, then?

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  7. If someone could make a decent 2.8% beer I'd happily drink it. I reckon the Kernel could come up with something.

    If only it was more realistic like 3.2% or something it might actually have worked. You could quite easily make a decent tasting mild or hoppy golden ale at that ABV.

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  8. I'm with Clarkey, you ought to mention the bandwagon jumping credit taking beard club ;)

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  9. Cookie - I think it was us beardies that got the bandwagon rolling so I think we are entitled to jump on it.

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  10. I've always preferred the dray to the bandwagon.

    I suppose, John, that it's hard to give credit when it's due if you've spent years slagging off CAMRA.

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  11. I think the blog post does afford credit to the campaign to scrap the escalator which was in fact a broad coalition that included CAMRA, who joined the party relatively late but did deliver a substantial portion of its members for the on line petition and effectively organised the lobbying of parliament. The post also gives no specific mention of Marston’s or Wychwood breweries or even the Sun newspaper so it is hardly CAMRA bashing by declining to big up the beards or their contribution.

    The idea that any of this forced the governments hand is pushing it a little. The government suffered a horrendous budget last year, is in the mist of all of its economic targets being missed and is going into the next election with an economy still in intensive care. If the campaign achieved anything it was to highlight to the government a relativity low cost popular measure regarding an increasingly ineffective tax. Small business owners are more likely to fall into the constituency of Tory party support than the bearded public sector workers that vote labour so Gideon also threw a bone at a few people that are the lifeblood of his local associations.

    As many have pointed out, it will have no real effect of the cost of a pint but in politics terms he played a blinder and scored a few goals for his own team as full time approaches. If he knocks another 1p beer tax off it next year we might all forget that government debt is £25k per household and put the arithmetically illiterate posh twat back in. Which is only really appealing if the alternative is Ed Balls.

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  12. Will CAMRA also take the credit when minimum pricing comes in and is quickly ratcheted up to £1 per unit, causing every pub in the UK outside of London to shut?

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  13. My prediction for that one, pyo is that CAMRA will spend about 12 months taking the credit for 50p a unit. The following year when it goes to 80p a unit and Timbo cancels the spoon tokens and membership falls of a cliff the beards will start to ponder it, then at £1+ a unit the middle class professionally waged childless beer snobs will proclaim “we hate the spoons anyway, so what?” oblivious to the fact that as boozers they are now a minority and the new smokers in society. Eventually once it affects the £4 pints of crafted pong they will come out against it and like CAMRA’s support of the beer orders rewrite history to claim they never supported it in the first place. By then there will be 2 pubs left. Both in London and both marketed to tourists as “pub museums” where under employed actors will be employed to sit in all day to play tunes on the piano and recreate the atmosphere of what were once called pubs. Your grandchild will take one look and say he’s bored so you will take him for a calorie free meal in a plastic franchise restaurant and weep solemnly into your caffeine free coke zero. At the next table will be a bearded twat telling you the calorie free Fanta is drinking well today.

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  14. Ah well, re mentioning CAMRA, damned if I do and damned if I don't...

    Someone else claiming credit for it today.

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  15. Ha. Tne Taxpayers Alliance now claiming victory for it? The bandwagon was already at the bottom of the hill when they ran to jump on it.

    Anyway, everyone knows it wos the Sun wot won it.

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