The current iniquitous regime of alcohol taxation is, claimed Bott, “unfair to brewers, to pubs and to drinkers” and has led to falling overall beer sales, pub closures and ultimately lower revenue from duty into the Treasury’s coffers. He said, “SIBA is fully committed to pragmatic reform of alcohol duties. We are happy to pay our fair share, but not the unfair share we are currently required to contribute.”
Bott continued, “Punishing beer duty levels are clearly responsible for the societal changes that have taken place in the 32 years since SIBA was formed. The alcohol we drink and the way in which we drink it have been reshaped by successive Governments’ taxation policies. Beer volumes have fallen while spirits, wine and cider are all in growth, thanks to a system which puts them at an advantage, and brewers and the pubs that sell beer, at a damaging disadvantage.”
While beer duty has increased by 35% over the last five years, spirits enjoyed a duty freeze for a decade from 1998 which has turned them into the ‘pre-load’ drink of choice. Wine duty, though linked to beer, has a banded structure that has allowed producers to increase ABV up to 15% with no additional tax liability. Bott said, “The Government seems intent on driving consumers away from beer to drinks with a higher alcohol content, which seems at odds with its policies around alcohol related harm.”
Turning to cider duty, Bott pointed out that currently, the largest global cider producers pay less duty than the smallest UK microbrewer receiving the maximum amount of Small Breweries’ Relief (SBR). Cider duty is less than half that of beer, and has the additional advantage of banding. Bott said, “The disparity between beer and cider duties is nothing less than an invitation to large drinks producers to swap their consumers from one fermented beverage to another.”
He continued, “Alcohol taxation iniquities are not just encouraging people to switch from beer to other drinks, they are also driving drinkers out of the pub – the only place where alcohol consumption is supervised. The Government’s policies have been putting at risk the health of the nation.
“ After much campaigning, on which SIBA has aligned with the BBPA, CAMRA and others, many politicians and health campaigners now recognise that beer, a low-alcohol drink, consumed in the socially responsible environment of the pub, should be seen as part of the solution to alcohol related harm – not the problem. The trouble is that, while our arguments are beginning to hit home, we are not getting the results we need now in order to avoid further damage to our industry.
Bott explained that, in keeping with SIBA’s pragmatic approach to duty reform, the organisation had realised that, in the current economic climate, straight concessions on beer duty would be too big an ‘ask’ of the Treasury.
He continued, “SIBA’s Budget submission this year presented what we believe to be a very credible proposal to extend SBR to brewers producing up to 200,000 HL annually. Crucially, we demonstrated how funding for this extension could be achieved simply by pegging the difference between beer and cider duties at its current level, rather than applying across the board percentage increases which would further increase the gap and gift another windfall to cider.“
SBR, introduced in 2002, has proved to be an outstanding example of what can be achieved through targeted Government investment. In the past decade, the local brewing industry has thrived: SIBA membership has grown from 235 to 550 brewers, most of them small businesses who provide local jobs and contribute to the local and wider UK economy.
Turning to minimum pricing, Bott reminded the audience that SIBA had been the first trade body to cautiously welcome the idea, as a way of closing the on-off trade price gap. He said, “The Government is keen to do something around alcohol pricing, what we need to do as an industry is find the right mechanism to allow us to keep control, so that it is not captured by the temperance movement, nor used as a cash cow.”
Closing his address, Bott said, “SIBA will continue to strive for a market for beer that is sustainable for all sizes of brewer. We will not shy away from fighting for what is right, nor will we look at issues from our own perspective alone and we will continue to base policy on what is good for brewers and beer drinkers. Most importantly, we will work to put beer back where it belongs, at the very heart of British society.”
Caption to attached image: Keith Bott, SIBA chairman, at the organisation’s annual conference in Stratford-upon-Avon