While many sectors have begun to feel the beneficial impact of the gradually improving economy, pubs, breweries and distilleries around the country are still struggling.
It is hoped that the measures taken in the budget will stem the flood of pub closures
With the Campaign for Real Ale (CAMRA) showing pub closures are once more reaching worrying levels, and pub chain Punch Taverns hitting the headlines due to its struggles with debt management, it has become clear that the issue must be urgently addressed in order to prevent one of the UK’s most traditional industries vanishing altogether.
Fortunately, Chancellor George Osborne has used this year’s Budget to tackle the problem by freezing duty on alcoholic beverages and reducing beer duty by one pence per pint for the second year in a row. This measure is expected to prove particularly beneficial to whisky distilleries in Scotland – causing some to question whether the reasoning behind the freeze was to persuade Scottish voters to remain part of the UK.
Under the new plans, the Treasury will lose in the region of £1.5 billion over the next five years, with a £285 million loss over the next 12 months alone. However, as tobacco duty has risen by 2 per cent above inflation, this will go a fair way in making up the deficit with an additional £360 million going to the Treasury from smokers.
The Scotch Whisky Association’s chief executive, David Frost, welcomed the news, believing it will help to boost sales in both pubs and off-licenses.
He says; “It is a move that supports hard pressed consumers, a major manufacturing and export industry and the wider hospitality sector.”
As well as freezing duty, the Chancellor also confirmed that the controversial alcohol duty escalator will now be scrapped for all drinks, meaning that duty paid on beverages such as wine, beer and spirits will only rise in line with inflation rather than increasing exponentially. Mr Osborne hopes that this will level the playing field between pubs and supermarkets and slow the tide of pub closures which have become commonplace in the British commercial property market in recent years.
One of the most important ways in which the Budget will benefit producers of alcoholic beverages is undoubtedly the fact that cider makers in the West Country will face less pressure to meet targets after the recent floods devastated many businesses. Commercial director of Healeys Cyder, Joe Healey, believes that this will aid recovery and encourage higher levels of spending by consumers.
He says; “It makes cider relatively more affordable and doesn’t put us at a competitive disadvantage to other categories.
“Consumer spending is being squeezed, with inflation growing faster than wages, so it’s just being realistic that people don’t have as much to spend on luxuries.”
Do you think the 2014 Budget has gone far enough to protect local pubs from closure, or would addressing business rates on top of the alcohol duty freeze have made much more of a difference to independent landlords?
