Cut tax on draught beer to help pubs thrive once COVID restrictions end says CAMRA

CAMRA, the Campaign for Real Ale, is urging Rishi Sunak to commit to cutting the tax charged on beer served on tap in pubs and social clubs in the next Budget to help them rebuild their businesses once COVID restrictions are lifted. 

Reducing the tax on beer depending on how it is served is now an option the Government can take to support the industry now that the UK has left the European Union. This move would help make pub-going more competitive against booze on offer at supermarkets. 

The consumer organisation has written to the Chancellor to ask him to consider a package of measures ahead of the March Budget, which includes:  

• Ongoing, regular grant payments to help pubs and social clubs cover costs when they are forced to close or operate at a reduced capacity 
• Continuing the furlough scheme as long as pubs and clubs are subject to trading restrictions 
• Making sure that brewers and cider producers are eligible for support schemes 
• Announcing another business rates holiday for 2021/22 
• Extending the VAT reduction to beer to support wet-led pubs 

CAMRA has commissioned research which found that a modest reduction in tax on draught beer could result in £26.6m of additional expenditure on draught beer, bringing alcohol consumption back to into the social setting of our pubs, creating jobs and boosting the economy in the process.

CAMRA National Chairman Nik Antona said:  “The next Budget is an ideal time for the Government to announce some much-needed long-term financial support to help the beer and pubs industry recover from the COVID crisis. 

“As well as ongoing support whilst restrictions on trading remain, we would like to see a long-term change to the way beer is taxed to reduce the price of a pint specifically for pub-goers. This move would help pubs rebuild their businesses, compete with cheap supermarket booze and secure their future at the heart of our communities. 

“It would also encourage responsible drinking in the supervised setting of community pubs – with all the social and mental health benefits that come with it. 

“We hope that the Chancellor will listen to our campaign and commit to reducing tax on the pint in the pub, helping our locals at a time when they need it most.” 

Ends

Read CAMRA’s letter to the Chancellor below:

Dear Rishi Sunak, 

Budget 2021 

I am writing from CAMRA, the Campaign for Real Ale, on behalf of our nearly 180,000 members across the UK, ahead of the Budget in March. We are a consumer group that has operated for 50 years, representing beer drinkers and pub lovers across the UK, to promote real ale, cider and perry and thriving pubs and clubs in every community. 

Pubs and social clubs are a force for good – they create jobs, boost local economies, foster social and community wellbeing, and help combat loneliness and social isolation. Prior to the COVID-19 pandemic, the beer and pub sector added £22.9 billion to the UK economy annually. This included paying £12.7 billion in taxes, £11.1 billion in wages, and £2 billion in investment. 

The Government has provided support that has helped community locals since the start of the Coronavirus crisis, including the cancellation of business rates for the 2020/2021 year, the Retail Hospitality and Leisure Grant and the Coronavirus Job Retention Scheme. While a path out of the crisis is now in sight, there is understandably no confirmed date for the end of the current lockdown in England or the lifting of restrictions that will affect the hospitality sector beyond that time. Therefore, it is vital the Government continues to show confidence in pubs, clubs, brewers, and cider makers, and takes decisive action to support them in this Budget.  

Before the current UK-wide lockdowns, the hospitality sector was subject to more stringent restrictions than other types of business with constraints on trade under Tier systems (particularly for wet-led pubs) and curfew – measures for which little supporting evidence has been produced. Therefore, this Budget should lay out a clear roadmap of sector-specific support that pubs, clubs, brewers and cider makers can expect as they can reopen and build trade again.  

Pubs and clubs in England have been prevented from selling alcohol during the latest lockdown, except by delivery services – which is unviable for most of them. This has removed an income stream that was relied on during previous lockdowns and prevents them from trading on a level playing field with off licences and supermarkets. This is another reason why increased support, especially for wet-led pubs who cannot operate food delivery services, must be made available in the Budget.    

Pubs and social clubs across the UK will be central to the recovery of communities from the social impact of the pandemic, as well as being important to their economic recovery – but there can be no such recoveries if hardworking licensees cannot afford to open their doors again. 

There is a need for both short-term measures to safeguard the future of community pubs and clubs, and a longer-term stimulus to ensure that hospitality venues, and the brewers and cider makers that supply them, can rely on to help enable them to return to pre-pandemic trading levels. CAMRA wants to see a diverse and thriving hospitality sector, with community pubs and clubs, and consumer choice in high quality beers and ciders.   

The key measures that CAMRA would like to see announced in the Budget are:- 

Short–term measures to ensure the survival of pubs, clubs, brewers, cider makers and the jobs that they support. 

There are three key measures that the Government can take to ensure that pubs, clubs, brewers and cider makers survive to be part of the post-pandemic recovery.  

1. Regular grant payments, delivered in a timely manner. 

Timely delivery of financial support is vital. At the time of writing, 74% of wet-led pubs surveyed by the British Beer and Pub Association had not received the £1,000 Christmas support payment that was announced by the Prime Minister in early December. This is the only relief that wet-led pubs have been offered for the months of Tier restrictions that have singled them out for harsher restrictions due to not serving food. Additionally, 46% of respondents said that they were yet to receive Local Restriction Support Grant payments from Tier restrictions before Christmas. 

Please work with colleagues in other Departments, and Billing Authorities across England to ensure that existing and future grant payments reach businesses as soon as possible.  

Licensees and brewers have ongoing costs that include rent, utilities, insurance, and other services, even if they are not trading. While the one-off grant payments of up to £9,000 for hospitality businesses in England are welcome, there is still a great deal of uncertainty as to when the current lockdowns and other restrictions on trade will end. Venues need to plan to operate within these, which will require certainty about the level of support that they will get. This means that increased and regular grant support will be vital, as opposed to another one-off payment. 

2. Commitment to extend furlough support for as long as the on–trade is subject to restrictions. 

Before the Coronavirus lockdown, nearly 900,000 jobs were supported by the UK beer and pub industry, with 43% of these jobs filled by under 25s. Hospitality businesses have the highest proportion of staff furloughed under the Coronavirus Job Retention Scheme out of any sector – the Scheme has been a lifeline for pubs and the people that work in them.  

Unfortunately, 1 in 8 hospitality workers have been laid off since the start of the pandemic2. Extensions to the Coronavirus Job Retention Scheme have been vital to making sure that figure does not increase further.  

We do not know when restrictions can be eased to allow licensed premises to reopen, and when they do there may still be significant restrictions in place that limit trading and prevent businesses from bringing back all their staff from furlough. Therefore, we would like the Government to commit to continue access to the Job Retention Scheme for the hospitality sector until full reopening can happen.  

3. Ensuring that brewers and cider makers are eligible for all grant schemes and support measures. 

Since the beginning of the Coronavirus crisis, brewers and cider makers in England have been unable to access the same level of financial support as pubs and hospitality businesses, despite being an essential part of the supply chain. This is threatening a previously thriving market for smaller scale producers, and local products.  

As small brewers derive most of their sales through pubs and the wider on-trade, lockdowns and restrictions affect them just as much as licensed premises – to devastating effect: it has now been reported that two small brewers are closing each week3. 

Brewers and other producers have not been eligible for the business rates holiday or hospitality grant schemes and cannot benefit from the knock-on effects of the temporary VAT reduction as it does not apply to alcoholic drinks. Some have been subject to a ‘postcode-lottery’ when applying to local authorities for discretionary grants, depending on local criteria. 

Please use this Budget to confirm the vital role that brewers and cider makers play in the UK’s hospitality industry, and in providing choice for consumers – ensure that they can access the same level of financial support and relief measures as other hospitality businesses.  

Longer term stimulus to ensure that pubs, clubs, brewers, and cider makers are central to the post-pandemic recovery. 

1. Extend the business rates holiday for 2021/22. 

We applauded your decision to suspend business rates for the 2020/21 billing period for hospitality businesses in England as a response to the onset of the Coronavirus crisis.  

The pub sector pays a disproportionate level of the business rates burden – before this year, pubs paid 2.8% of the business rates bill in but only accounted for 0.5% of total business turnover, which is an overpayment of around £500 million by the sector each year.  

Cancelling business rates for the year is therefore a targeted and significant relief for pubs, who already over-pay their share of the business rates burden. Now that licensees are again facing a significant period of closure and supressed trade (with no end for the current lockdown and any subsequent restrictions in sight), it is vital that you extend the business rate holiday to cover the 2021/22 billing year. This will boost business confidence as pubs and social clubs begin to trade again. 

Finally, any reforms resulting from the ongoing Business Rates Review must make the Business Rates system in England fairer for pubs and other hospitality businesses and seek to balance the tax burden equally between internet and property-based business.  

2. Extend the VAT reduction on food and non-alcoholic drinks. 

The reduction in VAT for on-trade food and non-alcoholic drinks was applauded from all corners of the hospitality sector ahead of the reopening of pubs last summer.  

The same businesses are facing that process again. Therefore, the cut must be extended to cover the period in which pubs and clubs are rebuilding trade, to encourage consumers to return and aid the sector in bouncing back from months of closure and restrictions.  

However, not all hospitality businesses benefit from the VAT cut as it is currently applied. Wet-led pubs and clubs have been penalised through the Tier systems in place across the UK, often being forced to close when those that serve food could stay open and serve alcohol. CAMRA maintains that this was grossly unfair and the Government (and those in the devolved nations) has not produced any evidence to justify those restrictions. To support wet-led premises, and the brewers and cider makers that supply them, it is vital that the scope of the reduction is widened to include alcoholic drinks.  

3. Introduce of a preferential rate of duty on draught beer. 

As part of the ongoing Alcohol Duty Review, a preferential rate of duty for draught beer should be introduced in the UK.  

This will reduce the price differential between supermarket and on-trade alcohol and encourage consumers back to pubs, where social wellbeing benefits accrue that do not apply to alcohol consumed at home. In 2018, the average price per pint of beer was £3.76 in the on-trade versus £1.34 in the off-trade.4 

CAMRA has already commissioned research that found that a modest reduction in tax on draught beer could5: 

• Result in £26.6m of additional expenditure on draught beer. 
• Pull consumption back to into pubs from the off-trade. 
• Create additional jobs in pubs. 

A more ambitious cut could produce even greater benefits, getting more people back to the pub, and putting more money into local economies. Introducing a lower level of tax on draught beer presents the perfect opportunity to encourage responsible drinking in community pubs, support local jobs and bring much needed investment to villages and high streets across the UK once restrictions are lifted.  

The Alcohol Duty Review also presents an opportunity for the Government to introduce a sliding scale of duty relief for small cider and perry producers to taper from the point at which the current duty exemption for small producers is applied. This will help support small and farm-gate producers and ensure consumer choice is maintained.  

As always, CAMRA members – and all beer and pub lovers across the UK – want to support our community pubs, social clubs and the wider hospitality sector when venues can reopen again.  

Please use this Budget to show your support for licensees, brewers, and consumers, so that everyone will have a local to return to when it is safe to do so. 

Yours sincerely, 

Nik Antona 

CAMRA Chairman