A Timely Reform by Ian Ridley

Blog & web site of Ian Ridley

March, 2013Archive for

Small Beer?

Thursday, March 21st, 2013
Pint Of Beer

Photo: Ian T CC-BY-SA-2.0, via Wikimedia Commons

One of the changes in yesterday’s budget was a 1p cut in beer duty. Could it have been better targeted?

Making a pint cheaper by 1p is probably neither here nor there for pub-goers. Yet how much is it costing the Treasury? According to the House of Commons Library beer duty accounts for about 40p a pint and HMRC states that it raises just under £3.5 billion per annum. So a 1p cut is worth about £90 million.

The pub trade has been under pressure from duty and VAT increases, declining disposable income and more people drinking at home. Assuming that pubs are something that we want to keep, would it have been better to use this money to directly help individual pubs? The latest BBPA survey shows there are around 50,000 pubs in the UK. So if beer duty had not been cut, about £1800 per pub would have been available, more than double that if you targeted help only at the 20,000 or so Free Houses.

Many pubs are small business, so the budget should help anyway with the reductions in Employers’ NI rates. This extra pot of money could have further assisted pubs, perhaps in lower business rates or other tax breaks, rather than the broader approach of a token cut in duty that mostly helps big drinks firms and pub chains.