Pub industry furious over rise in alcohol duty

20 March 2008 by
Pub industry furious over rise in alcohol duty

The pub industry has been licking its wounds in the past week as it reflects on a shock rise in alcohol duties in the Budget.

Everyone was prepared for a rise, despite industry pleas for the exact opposite, but Chancellor Alistair Darling surprised all with the severity of the increase.

Alcohol duty rose by 6% on Sunday and Darling has committed the Treasury to a tax rise of 2% above inflation for three years after that.

It was yet another blow for an industry already suffering the impact of the smoking ban and tightening consumer spending in the wake of the credit crunch. Now it will have to pass on rises of 4p a pint on beer, 3p a pint on cider, 14p on a bottle of wine and 55p on a bottle of spirits.

Final straw

For many it was the final straw. Jonathan Neame, chief executive at brewer and pub operator Shepherd Neame, had lobbied the All-Party Parliamentary Beer Group on behalf of the British Beer & Pub Association (BBPA) in November, arguing that a tax freeze on beer would encourage drinkers back into the controlled environment of the pub and reduce problems with binge-drinking. He reacted angrily to the rise.

"People who work in this industry know that targeted solutions are what is needed, and that is targeted education, targeted information and even targeted tax policies," Neame told Caterer. "To come up with this blanket, one-size-fits-all idea shows a profound arrogance and ignorance and a thorough disdain for the people who work in this industry. It's so wanton and capricious."

Pub operators are beginning to feel persecuted, Neame warned. "The chancellor is basically saying ‘I do not like anything about your industry, I do not understand it and I want you to do less this year than you did last year'," he added.

The tax hike was so far removed from the advice being issued by the BBPA and its fellow industry bodies the Association of Licensed Multiple Retailers (ALMR) and consumer drinks group the Campaign for Real Ale (Camra) that many are now asking: how effective is the pub industry at lobbying?

Mike Benner, chief executive at Camra, admitted that such criticism was "not unfair", and added that the industry needed a short period of reflection about what its avenues of argument were and how to move forward.

"We've been working very closely with the BBPA. We've shared panels with them in Parliament. However we, as a consumer group, decided the problem was sufficient enough to call for a cut. Could the industry work better? Yes but people were in agreement on this," he said. "The chancellor has announced tax increases above inflation for the next three years. That is a commitment and we have to be moving towards the pre-Budget in November and look at other avenues that Camra can get across. In our view, pubs are the solution to binge-drinking problems."

Nick Bish, chief executive at the ALMR, admitted that, while the industry had been "more or less saying the same thing" on the beer tax issue, it needed to show more cohesion in its arguments. "We need to keep telling the Government about the impact they are having on pubs and there are a lot of operators who are pretty livid with the Government," Bish said. "If you want to have influence on anyone you have to have their ear and it's hugely frustrating for the companies in this industry and their representatives."

But his real frustration was targeted at the Government, arguing that the tax rise will exacerbate the problem of "pre-loading" (drinking cheap supermarket booze before hitting the pubs and clubs) as retailers are able to sustain price structures on alcohol because of their purchasing power.

Mark Hastings, director of communications at the BBPA, said it was too early for a firm decision on the pub industry's next step in lobbying the Government, but insisted that groups such as the BBPA had lobbied cohesively and effectively.

Without merit

He said the Government had heeded the BBPA's advice in certain quarters, but the chancellor had seen the tax rise as a simple generator of revenue for other policies and nothing more. "This decision is not only without merit but flies in the face of logic," he told Caterer. "We'll continue to work together with our members and with other organisations and we will increase the focus on this issue."

Whether "increasing focus" will be enough to convince a Government that sees the hospitality industry as a soft target remains to be

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