Rishi Sunak is the toast of the drinks industry after producing a crowd-pleasing cocktail of measures in the budget to boost pubs and reduce bar bills.
The British chancellor scrapped a planned increase in duty on beer and spirits, while taxes on all other kinds of alcoholic drinks are also to be frozen.
In a further tonic for the trade, the chancellor said he was also making big changes to the business rates paid by pubs this year, in an effort to insulate them from the economic effects of the new coronavirus.
Leisure businesses with a rateable value of less than £51,000 will pay no rates for the next 12 months, while the “pub discount” given to bars with a rateable value of up to £100,000 will increase from £1,000 to £5,000 this year.
Sunak, who does not drink alcohol, told the Commons: “Pubs are at the centre of community life. But too many have closed over the last decade … For only the second time in almost 20 years, that’s every single one of our alcohol duties frozen.”
The moves were predictably welcomed by the alcohol trade. Nik Antona, chairman of the Campaign for Real Ale, said: “Against the backdrop of industry fears on coronavirus, it is good to see the government has continued to recognise the value of pubs to the economy and society by freezing beer duty in the budget. Brewers and pubs companies must now pass any savings on to consumers.
“The abolition of business rates for pubs with a rateable value under £51,000, and the £5,000 discount for those with a value up to £100,000, is great news for qualifying pubs.”
Miles Beale, chief executive of the Wine and Spirit Trade Association, added: “[The chancellor] has shown he is in touch with British consumers, from all walks of life, who want to enjoy a drink without getting stung by further tax hikes. In particular, the UK’s 33 million wine lovers, a large proportion of whom are women, are expressing a sigh of relief after they were singled out for a duty rise at the last budget.”
About 13,000 pubs closed between 2001 and 2018, which the industry has blamed on factors including high business rates, cheap supermarket alcohol, the rising minimum wage, the smoking ban and changing social habits.
However, the decline may be at an end, after official figures published in December showed that the number of pubs had increased for the first time this decade. The figures showed that the UK ended March 2019 with 39,135 pubs, 320 more than a year earlier, according to the Office for National Statistics. It is the first net increase since 2010.
Apart from his efforts to support the pub trade, Sunak also moved to support the Scotch whisky industry, which is being hit by high tariffs on its exports to the US.
He said: “Scotch whisky is a crucial industry, and our largest food and drink export … We will continue to lobby the US government to remove this harmful tariff. In the meantime, I’m announcing today £1m of support for promoting Scottish food and drink overseas, and £10m of new R&D funding to help distilleries go green.”
Karen Betts, chief executive of the Scotch Whisky Association, said: “Our industry continues to face significant damage to exports to the US, our largest and most valuable market, because of a 25% tariff imposed on single malt Scotch whisky by the US government as a result of a long-running dispute between American and European aircraft manufacturers. We are pleased that the chancellor underlined the UK government’s commitment to resolving these damaging tariffs quickly.”
Sunak did raise the duty on tobacco. From Wednesday evening, he said, duty rates on all products would increase by the rate of inflation plus 2% annually until the end of the current parliament.
Simon Clark, director of the smokers’ group Forest, said the move would add 27p per pack of 20 cigarettes, with hand-rolling tobacco increasing by 67p per 30g pouch. He said: “another kick in the teeth for poorer smokers in particular. If the Conservatives want to keep their ‘red wall’ seats, they need to show a lot more empathy for ordinary working people, including the millions of adults who enjoy smoking.
However, the campaign group Action on Smoking and Health (ASH) welcomed the increases.
Deborah Arnott, chief executive of ASH, said: “Despite successive years of tax increases, the past failure to close the gap in tax on hand-rolled tobacco has kept smokers smoking who might otherwise quit. Thousands of smokers have switched to cheaper hand-rolled tobacco in recent years. We welcome the government’s efforts to address this. But it must go beyond a single year.”
