Thursday, 24 March 2011

The Beer Duty Escalator Rumbles On

BBC News - Budget 2011 at a glance: George Osborne's key points: "No additional changes to alcohol duty rates but 2% above inflation rise in excise duties for wine, spirits and beer to go ahead"

Well this will close a few more pubs then - not enough to continue to allow the Pub owning Property Companies (Punch, Enterprise and their ilk) to carry on fleecing their tenants and their tenants customers, this 'Pub friendly' lot have hammered another nail in the coffin of that Great British institution - The British Pub.

When Britain finally wakes up and finds that between the Pub owning Property Companies and the Treasury they've sleep walked into a situation where there is nowhere left to sit and chat with friends over well cellared, hand crafted ales or indeed gas filled euro-fizz for that matter, then a little more of what makes Britain and the British unique will be gone forever. See what's happening in Cornwall.

We know what happens when Beer Duty is increased because we've seen it before. The Treasury puts 7.2% on the Duty for every pint as it leaves the brewer. The Pub owning Property Company will then squeeze a little more off the price they're paying for the beer from the brewer, then add it and more back in to the price they sell it to the tenants for. The poor tenant has no choice then but to put the price up, lose more customers and go to the wall. I don't expect that the rise at the bar will be any less than 10p on a pint and could be as much as 20p.

This is why when you pop in to the pub next Monday evening, there will be fewer people drinking fewer pints, to talk to.

Now we come to the supermarkets; with this 7.2% increase the duty on a pint will now be 44p add in another 50p in VAT at 20% and we're on about £3 for a pint of ale in a pub. The supermarket will sell a 4-pack (about 3 pints) for no more than £3.50 (Tesco - 2 for £7) of which £1.32 is Duty and 70p is VAT. So cheap alcohol bought in the supermarket costs not only the British Pub dear it also amounts to a loss of 26p per pint to the Treasury. On the 2010 figures for UK beer consumption, and bearing in mind 52% (11,618 million pints) of beer is purchased in supermarkets and drunk at home costs the UK £3,021 million pounds.

Where should we go from here? I'm no genius but I can see that if we are going to see the pub survive and tenants able to make a proper living while curtailing the ill effects of excessive consumption the obvious answer is to curb alcohol sales in supermarkets while pricing the beer to the pub competitively with off-sales pricing. The bonus is of course, more drinking will be done in a controlled and 'responsible' environment and less damage will be done to peoples health through excessive consumption of cheap supermarket booze.

My feeling is that an 'off-sales' levy should be brought in to reduce the price difference and at the same time compensate the Treasury for the reduced tax take due to falling volumes. In addition a reduction in health care cost due to excessive consumption would keep the health lobby happy. The only losers would be the supermarkets but business is business!