Campaign for Pubs

Mixed news for pubs in Budget 2021 as Chancellor announces limited help from April 2022 but outrage as new ‘draught duty relief’ rules discriminate against small brewers

The Campaign for Pubs has responded to today’s budget, which has mixed news for pubs, but has caused outrage amongst the nation’s craft brewers at being directly discriminated against, in favour of global brewers, when it comes to draught beer duty.

The most positive measure for pubs is a new 50% business rates discount in the year 2022-2023 for companies in the retail, hospitality, and leisure sectors, including pubs lasting for one year up to a maximum of £110,000 (but this will therefore not start until April next year).  However once again small breweries and other small producers reliant on pubs, that have also suffered due to the pandemic, are not eligible, something the Campaign for Pubs think is wrong.

The Chancellor has also announced a new “draught duty relief” of a 5% cut on draught beer and cider, but only to come in in April 2023 according to Government sources. This could and should be positive, in terms of incentivising production and consumption of draught ales in pubs, however is only on draught containers over 40 litres, which is seriously discriminatory against small brewers and cider makers and pubs who specialise in craft beer or sell smaller volumes, such as rural pubs and micro-pubs.

This is because 30 litre craft kegs, a key size for craft brewers, and small casks of real ale (36 pint pins) are excluded, as is bag in the box cider and perry. The Campaign for Pubs is calling on the Government to understand the way this deeply ill-considered measure will further increase the dominance of global brewers in the on-trade, precisely the opposite of what the Government claims to support, as well as failing to help many smaller pubs reliant on smaller containers,

The Campaign for Pubs will be campaigning to remove the arbitrary and discriminatory limit so that the draft duty relief applies to all draught products.

Disappointingly, there was no good news on VAT – a direct tax on pubs, as opposed to beer duty, which is a tax on producers, paid by producers, will be going back to the full 20% level. The Campaign for Pubs had consistently called for direct support for all pubs through 5% VAT on all pub sales, including beer, to help all pubs, including traditional local pubs that have been hardest hit by the pandemic and lockdowns. This would be a much better way to support pubs, than the duty changes announced.

The Chancellor also confirmed the leaked announcement, that National Living Wage would increase to £9.50 per hour for those over 23 from April, something that will put increased pressure on pubs, putting up wage bills in pubs, despite trade being down and costs being up.

Pubs are facing a cost crisis, with beer and product price rise, energy bills going up and now also an increase in the minimum wage, something that whilst it is welcome for pub staff, actually means that pub tenants and freeholders, still facing reduced trade, simply cannot afford to keep as many staff on. As it is, VAT on beer and all other alcohol has been at 20% throughout, something that has discriminated against traditional ‘wet-led’ pubs that don’t do food.

As a result of these measures, the price of a pint is expected to increase significantly, so this not be anywhere near offset by changes in beer duty (which in any case, are not happening immediately and, being a tax on brewers, are often not passed onto pubs anyway). 

The Campaign for Pubs is still also calling on the Government to take meaningful action on rents, to stop the fact that some pub-owning companies and commercial landlords are charging full rents on pubs, despite trade still being reduced. So far, the Government’s voluntary Covid rent Code of Practice has failed to address this problem and with rent being the biggest cost for many pubs, meaningful action is still needed to allow some pubs to survive.

Dawn Hopkins, Vice-Chair of the Campaign for Pubs and a licensee in Norwich said:

“Despite the headlines, the reality is that other than the welcome news about 50% business rates next year, which is vital for pubs, the Government is provided millions of pounds of tax relief to global brewers, whilst discriminating against the many wonderful small craft brewers in the UK and small pubs and micropubs who rely on them.

“So the Chancellor must look at this again and stop listening only to the voice of the global brewers and pubcos. The reality is that with rising brewery costs, high energy prices and ongoing uncertainty due to Covid, the price of a pint will rise far more than any duty cuts, so customers will not notice and it seems the changes are even not coming in yet.

“The outlook remains tough for the UK’s pubs and it is time that the Government listened to those who actually ran pubs, rather than to those who lobby on behalf of the huge corporations and supported pubs directly through this winter”.

Phil Saltonstall, Brewery Coordinator of the Campaign for Pubs and founder of Brass Castle Brewery said:

“Today’s announcement on draught duty relief could have been good news, but instead it disgracefully discriminated against UK craft brewers and the pubs and bars that rely on them. Big beer lobbyists are of course celebrating as this is a huge boost for macro breweries, who will seek to further lock-out small independents from 90% of the sector.

“It is shameful the way that they have ensured that small independent breweries and the pubs they supply get limited or no benefit, by restricting the draught duty reduction to containers over 40L – when they know that the containers used by small independent brewers and cider makers are under this size. So as it stands, the draught duty relief is manifestly targeted against UK craft brewers to the benefit of macro breweries.

“In any case, with every other associated cost going up, 3p per pint won’t be noticed by consumers or draw people back to responsible drinking environment of the pub, but it will make for healthy balance sheets in the relatively few big breweries. Once again, the Government is supporting the wrong parts of the brewing sector.

“The headline duty measure undermines small supplier competitiveness and gives very limited support to pubs.  Now we have to wait to hear how the wider duty review will impact and what happens to Small Brewers Relief when it is rolled across other alcohol types.  The omens are not good though, given the lobbying power that indie producers are up against but the Campaign for Pubs will continue to speak up for them and for publicans”.