News: Budget Reaction

“A shot in the foot, not in the arm”

The Budget has done nothing to help ease the credit crunch or offer respite for brewing, the wine business

or pub and restaurant sales, Horsham firms claim.

“It’s a shot in the foot for Labour, not a shot in the arm for the brewing industry,” said Andy Hepworth, boss

of Hepworth & Co microbrewery, responding to the 2% rise in duty on alcohol, which took effect at midnight

on the day it was announced by Chancellor Alistair Darling.

“I’m very disappointed. The Chancellor has offered no concerted plan to help the economy or the

beleaguered brewing industry.”

Pubs across Britain were closing at an alarming rate, he said. “Six a day are shutting but the Budget measures will only accelerate that trend. More will close.”

The 2% rise came on top of an 18% hike in the last 12 months, he added, including a “shock” 8% rise last November. “This latest move will damage sales still further – and it has come into effect just 12 hours after it was announced. It just hasn’t been thought through properly and in fact means the Treasury will collect less tax than before and is a missed opportunity to bring tax on cider up into line with other alcohol. Giving us little or no lead-in time prevents us from planning in a price rise but being pragmatic about it, this is the best we could have hoped for.”

The brewing industry was already paying far too much in taxes, he believed. “As a brewery employing 16 people, we are paying £672,000 a year in duty, VAT and business tax. This 2% rise will add another £7-8,000 to that.” But he said the measure would not affect the culture of binge drinking among the young “one iota”. “It’s just a tax-raising scheme and worse, one that will fail to raise more tax.”

Beer sales had been falling for some time but cask beer was “performing strongly compared to other sectors of the brewing industry. Microbreweries are in the strongest position of all,” he concluded.

Similar sentiments were voiced by the wine trade. “Our Darling Chancellor has done it again,” said Simon Deakin, who runs Deakin Fine Wines. “He had already put 15p duty on a bottle of wine last November, which came as a bombshell. Now it’s another 5p on top of that. We are the whipping boys – an easy market to target for duty.”

The move would hurt the hotels, pubs and restaurants sector, already reeling from the impact of the duty that the Chancellor imposed on wine last autumn, he said. "It would do nothing to halt the trend of more people buying alcohol in supermarkets for home consumption", he added “Supermarkets should stop Buy One Get One Free promotions and should not use alcohol as a loss-leader, selling three bottles of wine for £10, for example. They should be showing more responsibility.”

The loss of pubs was killing village communities, he said, a sentiment echoed by Andy Hepworth. He too wanted supermarkets to reverse their policy on selling cheap alcohol. “You can buy some alcohol products in supermarkets at less than the duty on them. That has to stop.

“This will hurt us but it is not fatal. We will have to get used to fewer pubs and fewer places for a social drink. These measures are helping destroy that part of our society.”

“This was a political not an economic Budget,” said David Harding, manager of the popular Boar’s Head pub in Worthing Road. “It was designed to hit the Tories rather than offer any real help for businesses.”

The pub sector was “punch drunk” with tax rises, he said. “We are unfairly taxed compared with other business sectors. This is the fourth or fifth time in two years that the Chancellor has raised duty on alcohol alone. The Government seem to think there is a moral right to tax it every year. Pubs are the soul of local communities and the Government is killing them.”

Although he had not yet raised prices at the bar, it was “only a matter of days” before he did so and that would mean about 5p on a pint of beer and between 20p and 30p on a bottle of wine.

“The beer I’m selling now I bought before the Budget but when that runs out, prices will have to rise to maintain profit margins but we have put prices up twice in the last year and there is an argument for asking how much more the customer can take.”

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