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MPs from all sides condemn UK’s beer duty tax escalator

In a Commons debate yesterday in the UK, MPs gave a unanimous vote in favour of reviewing the controversial beer duty escalator tax there.

Not one MP from either side of the House spoke in favour of the escalator during the three-hour debate and Treasury Minister Sajid Javid said he’d take away the messages from the debate.

“This Government recognises the importance of pubs and breweries,” he stated, adding that he’d “make sure the Government does more to help the industry” but pointed out that the Government will need to recoup the money from elsewhere.
Pubs have been closing for years and not simply because of the duty escalator, he pointed out, but also because of changing lifestyles and changing consumer tastes.

However the outcome of the debate was widely welcomed by the industry.

“Today’s debate in the House of Commons has confirmed that the beer duty escalator has no place in the future of the pub industry,” stated Pubs of Ulster Chief Executive Colin Neill.

Pubs of Ulster, which claims that rising beer taxes had been responsible for the closure of about 100 bars in NI, had earlier called on local MPs to make a stand against the UK Treasury’s continued use of the beer duty escalator.

The escalator, introduced four years ago under the then Labour government, means that duty on beer automatically increases by two per cent above inflation every year. At the last UK Budget, despite the UK Chancellor’s claims that there would be no change to beer duty, an overall increase of 5.7 per cent was added as a result of the escalator still being in place.  This added approximately 10 pence to the price of a pint.  By absorbing the increase, publicans are now losing approximately two pence on a standard £3 pint of beer and continuation of the escalator could force the closure of hundreds more businesses with the loss of thousands of jobs.

Pubs of Ulster had been at the forefront of calls to end the beer duty escalator, driving the UK-wide online petition calling for the policy to be scrapped.  This has now generated over 100,000 signatures, securing the parliamentary debate.

Pubs of Ulster Chief Executive Colin Neill stated, “One of the biggest issues threatening the survival of pubs in Northern Ireland is the beer duty escalator. Overall, since its introduction in 2008, duty has risen by 42 per cent and the UK now pays more alcohol duty per unit of alcohol than any country in the EU except Finland.  With pubs struggling to come through the ongoing economic storm, as well as trying to meet the many other financial demands that come with owning a pub, the beer duty escalator is an unnecessary burden that we believe will sound the death knell for hundreds of pubs”.

Any further increase would be difficult to absorb, he added. The effect of the beer duty escalator has also been felt by customers, with many being forced to pay more for their pint in cases where pubs have been unable to absorb the duty increase.  The danger is, faced with paying more for a pint in their local pub, more people are now opting to avail of the cheap alcohol on offer in supermarkets.

But the Government has stated that revenue generated from the beer duty escalator has helped tackle the UK’s current debt crisis and South Belfast SDLP MP Dr Alasdair McDonnell stressed that tax on alcohol was necessary.

The licensed trade and wider hospitality sector is a major employer in Northern Ireland and Pubs of Ulster called upon local MPs to ensure that Northern Ireland’s voice is heard during yesterday’s parliamentary debate.

“With the future of the industry in real danger, we hope that the calls coming from Westminster today don’t fall on deaf ears,” commented Colin Neil, “We also hope that the Treasury Minister Sajid Javid stays true to his word and takes away all the concerns raised at the debate and makes sure the government does more to help the industry.
“Pubs of Ulster will continue to lobby on behalf of the local industry and we hope that a review of the beer duty escalator will be announced ahead of the next budget in 2013; the future of the industry depends on it.”

This was the first time that the beer duty escalator had been debated in the House and following this, December 12th will see a Mass Parliamentary Lobby with over 1,000 beer drinkiers and pub-goers descending on Westminster to ensure that MPs keep up the pressure on Government to initiate a review of the escalator.

At the last budget, an overall duty increase of 5.7 per cent was added to beer thanks to the beer duty escalator still in place.  This has meant that when added to other business overheads, publicans now stand to lose money on every standard £3 pint of beer sold.At the last budget, an overall duty increase of 5.7 per cent was added to beer thanks to the beer duty escalator still in place. This has meant that when added to other business overheads, publicans now stand to lose money on every standard £3 pint of beer sold.

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