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How the beer tax escalator war was won


Thursday 4th April 2013 (Andrew Griffiths)
How the beer tax escalator war was won

GEORGE Osborne this week became the first Chancellor in more than 50 years to reduce the amount of tax paid on a pint of beer.

Here, Burton MP Andrew Griffiths tells Mail reporter JOSHUA TAYLOR how a lengthy campaign for a fairer deal for pubs and breweries ended in success this week when the 2013 Budget was announced.

FOR years, publicans and breweries have complained about the effect of the so-called beer duty escalator on their livelihoods.

At first glance, who could expect otherwise? Surely every industry moans about the amount of tax it has to pay? And if we gave them all a tax cut, the country would go bankrupt, right?

Well, not exactly.

The beer duty escalator drove up the amount of tax on a pint by two per cent every year above the rate of inflation.

When Labour’s Alistair Darling announced the measure in the spring of 2008, 6p was added to the cost of a pint in duty overnight. So they didn’t have to absorb this cost directly, many pubs and breweries then added on another 6p onto each pint sold to make up for the extra 6p they were having to pay in duty. In effect, the price of a pint to the punter went up by 12p.

Between 2008 and last year, beer duty in Britain rocketed by an astonishing 42 per cent.

“If it had not been cancelled by George Osborne, beer duty would have gone up by 50 per cent between 2008 and 2015,” Mr Griffiths, chairman of the parliamentary beer group, told the Mail.

“We were about the kill the goose that lays the golden egg.

“I really do think that cutting duty in the way they have will breathe a kiss of life into the patient and give us a real opportunity to rescue the industry and support breweries and pubs across Britain.”

The beer duty escalator was often described as one of the most unfair taxes levied by the British Exchequer.

Cider was protected from such rises because the Treasury saw it as a niche market that needed to be stimulated by tax breaks.

“Big breweries like Molson Coors in Burton are only making a couple of pence on every can they sell in a supermarket,” Mr Griffiths said. “Whereas Magners (a brand of cider) will make 50p on a can or bottle sold.

“This difference is simply because of the difference in duty paid by each company.”

So the inherent unfairness of the beer duty escalator was enough to galvanise its critics and see a vigorous campaign mobilised. MPs, companies, pressure groups and individuals all joined the fight.

Mr Griffiths even raised the issue during Prime Minister’s Questions earlier this year.

“There were lots of times in the campaign when you simply despair because you read something in a newspaper or somebody in the Government says something that flies in the face of what you are trying to achieve,” Mr Griffiths said.

“Along the way, so many people said we were wasting our time and, because of the state of the economy and the concerns about problem drinking, we were never going to convince the Treasury that the beer duty escalator should be scrapped.

“As recently as a few days before the Budget, there were brewers who were telling me there was no way we could achieve it.”

Cynics have laughed at the 1p duty cut, saying it makes little difference to ordinary people’s pockets. But the industry estimates that the duty cut, coupled with the abolition of the beer duty escalator, will save thousands of jobs this year alone because brewers and pubs can invest in employment rather than taxation.

Mr Griffiths said: “There are a whole host of things that are challenging our breweries and pubs. People’s changing habits and the recession have taken their toll.

“But there’s no doubt about it that if you increase duty by 50 per cent, damage will be done.

“The brewing and pub industry continues to face real challenges. We need to make sure they have a Government that’s supporting the industry and that we are promoting their brilliant products. The Government needs to promote the fantastic experience that is the British pub is.”

BEER DUTY ESCALATOR TIMELINE

MARCH 2008: Chancellor Alistair Darling unveils the beer duty escalator in his Budget statement. He confirms beer duty will rise by two per cent plus the rate of inflation each year until 2015. Discontent increases each spring as Mr Darling and his successor, George Osborne, allow duty to continue rising.

FEBRUARY 2012: The Campaign for Real Ale launches its ‘scrap the beer duty escalator’ petition on the Downing Street website.

SEPTEMBER 2012: The online petition reaches 100,000 signatures, enough to trigger a debate in the House of Commons.

NOVEMBER 1, 2012: 100 MPs in a House of Commons debate vote unanimously for the Treasury to review of the beer duty escalator before the next Budget, due in March 2013.

DECEMBER 12, 2012: 1,200 Campaign for Real Ale activists descend on Westminster to lobby 200 politicians.

MARCH 5, 2013: MPs debate the duty escalator in a Westminster Hall debate. They again call for the Government to review the levy before the March Budget.

MARCH 20, 2013: Chancellor George Osborne confirms he has cancelled the beer duty escalator and cut 1p from the amount of tax levied on a pint. Opponents of the escalator claim victory in their campaign for its scrapping.

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