Chancellor Jeremy Hunt’s ‘Brexit pub guarantee’, as announced in his first budget yesterday, has been met with confusion by the hospitality industry. Hunt announced yesterday that tax on draught beer in pubs will be frozen from August 1.
He said that duty on a pint in a pub will be ‘up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee’. He went on: “British ale may be warm, but the duty on a pint is frozen.”
However, behind the buzzy ‘Brexit’ related headlines, some operators have pointed out that the ‘small print’ doesn’t quite read that way. Duty is in fact set to increase by £225 million across the sector later this year.
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“When the chancellor said he was going to support pubs, you kind of thought ‘well that’s good’,” brewer William Lees-Jones, managing director of JW Lees, told the Manchester Evening News. “Then when you read the small print, duty would appear to be going up by 10 percent, which is the current rate of inflation, which is astronomical.
“What the chancellor’s done, I’m not going to say he’s lied, but he’s used a lot of smoke and mirrors. When it was first announced, people were saying ‘oh it’s really good news’, then you read the small print and you go ‘oh, no it’s not, it’s not good at all’.
“Duty is going to go up, but there’s going to be a slightly lesser amount of duty in pubs. We need to know what he means by that.
“I was thinking ‘oh we’ll be able to put the price of beer down by 10p’, and then when you look at it, it says ‘[duty] is actually going to go up, and then go down’. So it’s actually going to stay the same.
“We have another three months to go from his headline budget yesterday to knowing what it is that is really happening. It’s just politics really. Like all these things he’s saying that he wants to support pubs, but he’s not actually doing anything at all.
“But then that is the kind of spin doctoring that happens when you let politicians near microphones.”
Nick de Sousa, who runs Tariff & Dale in the Northern Quarter and The Lead Station and 97 in Chorlton, is equally unimpressed. “Any help is gratefully received, but a cap on energy would be far more helpful, and a reduction on VAT even more so. And adding hospitality work to the list of skilled workers,” he said.
“To conflate this with Brexit is complete nonsense. They either want to help the pubs or not. If you want a link to Brexit, the damage done is far worse than the freezing of some duty. I couldn’t even follow what he was saying.
“Does anybody know? It’s so opaque. Energy is massively more of an issue. Will a freeze be passed on in lower prices? We’ve just had a massive [price] hike from all our suppliers, specifically around beer, because they’re suffering from the utility hikes.
“What they’re trying to say is ‘we’re throwing you a bone, we’re not hiking duty, so you don’t have to hike your prices, so you’re not burning the consumer’. They’re trying to trumpet their generosity, but it doesn’t quite work like that.”
Sacha Lord, Manchester’s night economy advisor to Mayor Andy Burnham, tweeted in response yesterday: “Very disappointing that there is no mention of further support for business energy bills or any sector specific package for hospitality.
“As support tapers off for business from the end of March, it will create a sinkhole of financial difficulty for operators.”
Emma McClarkin, chief executive of the British Beer and Pub Association, added that the budget was a ‘make or break moment for pubs and brewers who have been running out of road for too long’.
She said: “Whilst the chancellor’s efforts to support our pubs and breweries are welcome, we look forward to seeing how the ‘Brexit Pubs Guarantee’ will deliver for our sector. The cut to draught duty as part of the alcohol duty reform is positive and we hope that it will result in a boost for our pubs this summer.
However, the fact is, our industry will be facing an overall tax hike not a reduction come August. Duty on non-draught beer will rise and the measures introduced today won’t rebalance the catastrophic impact soaring inflation and unfair energy contracts are having on both pubs and the breweries that supply them.
“As April 1 rapidly approaches, businesses are also nervously awaiting what’s next for their energy costs, and a lack of support in today’s announcement will have a direct impact on their ability to keep their lights on and doors open.
“We need the Chancellor to unlock growth opportunities for businesses of all shapes and sizes. We look forward to seeing how his measures on investment, people and skills will lay the foundations to allow our pubs and breweries to continue to create jobs and help regenerate local economies in every part of the country.
“The Chancellor highlighted how our pubs are the most treasured community institution, and we appreciate his efforts to provide some relief, but a lack of immediate support in today’s Budget will still put the future of many of them at risk.
“Having recognised the importance of our pubs and brewers, we look forward to working with the Government to resolve the fundamental issues holding our pubs and breweries back, including reforming business rates and reducing the unfair tax burden on our sector.
“It is still tough out there for our pubs and breweries and so we’re encouraging people to get out and support their much-loved locals.”