Better than a poke in the eye

This week’s Budget provided a crumb of comfort to drinkers in that the freeze on alcohol duties was extended from August this year to January 2025. This was given a cautious welcome by industry figures, as stated in the linked report.

Chief executive St Austell Brewery, Kevin Georgel, welcomed the decision to extend the freeze in beer duty but added it “will not see costs cut for our sector”.

In the same report, CAMRA chairman Nik Antona “welcomed the freeze in alcohol duty, as it would help to ‘mitigate an additional hike in costs’ to be passed on to pubs and pub-goers.”

However, this led to a strange wave of denialism in some quarters that alcohol duty had anything to do with the pub trade, such as this example from Ed Bedington, the editor of the Morning Advertiser, which I quickly slapped down.

Well, it’s a lot better than an increase, isn’t it? https://t.co/bYM6t3DF3f

— Pub Curmudgeon 🌸🍻 (@oldmudgie) March 6, 2024

Obviously, a freeze does not leave anyone better off, but neither does it make anyone worse off, which was a very real possibility if duty rates were increased in line with inflation. Clearly pubs are subject to many other cost pressures, but to dismiss the level of alcohol duties as irrelevant is ridiculous.

This was topped by the bizarre assertion that beer duty was paid by brewers and thus had nothing to do with pubs. In a very narrow sense this is true, but plainly it increases the cost of their product, which is then passed on to pubs and ultimately to drinkers. If the price increases, it may reduce the demand, and pubs may meet resistance if they try to pass on the full impact to their customers. It must be said that some people seem to have a very warped perception of the economics of the pub industry.

Compare this to twelve years ago, when CAMRA mounted a vociferous and ultimately successful campaign to scrap the hated Alcohol Duty Escalator, which raised duties every year by 2% above the rate of inflation - see the image at the top of this post. They even organised a mass lobby of Parliament to protest against it. Clearly then they saw it as a vital issue. And they are currently campaigning to widen the duty differential between draught and packaged beer from 10% to 20%. From the report I linked to above,

In response to the chancellor’s announcement, the Campaign for Real Ale chairman Nik Antona described the Budget as a “missed opportunity” to support the Great British pub by cutting tax on draught beer and cider... He said: “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.”

Perhaps they shouldn’t bother.

Irrespective of any impact on pubs, there is a strong philosophical case in general for cutting alcohol duties. We have some of the highest levels in Europe, and the only places that are anywhere close are Ireland and some of the Scandinavian countries. All the other major European countries such as France, Germany, Spain and Italy have much lower duty levels. This places an unfair burden on consumers and makes life more difficult for producers of all kinds of alcoholic drinks. Kevin Georgel of St Austell Brewery pointed out on in the linked article that British beer duty was twelve times higher than that in Germany, and called for the government to set out a roadmap to bring current duty down to the European average.

Don’t hold your breath, though. But, in the current climate, even freezing duty is a whole lot better than the alternative.