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It's time to stop taxing beer to death

Added: Monday, February 15th 2021

Beer pumps

I’m an eternal optimist. I believe pubs will re-open and we will hurry back to the local for a pint of beer. But hard-pressed publicans will need support. Millions of beer drinkers got used in 2020 to buying packaged beers and have noticed the price advantages offered by supermarkets.

If you are a dedicated lover of cask ale, you can hardly wait to watch a handpump dispensing malty and hoppy delights into a glass. Others are less fussy and may stick to bottles and cans that cost a fraction of a pub pint.

Supermarket beers are cheap because retailers buy them at deep discounts from brewers. Publicans don’t benefit in the same way. They have to pay top whack for their beer, which is one reason why draught beer is so expensive.

Loaded on to the price is duty – the tax on beer. We’ve known for some years that we pay higher levels of duty than most other European countries but just how big the difference is was highlighted by recent figures.

In December 2020 beer duty topped £337 million. That figure -- for just one month -- is more than a year’s annual duty bill in 19 other European countries. British beer drinkers pay more than 54 pence in duty on every pint. In Germany and Spain the duty rate is 5 pence per pint. In other words, Britain pays 11 times more in duty than those two countries alone.

It’s a similar picture throughout Europe. Only Finland and the Irish Republic pay higher rates of duty than Britain.

Politicians have historically seen beer as a convenient milch cow to subsidise other parts of the economy. Some years ago I attended a meeting in a St Albans pub that included the local MP and government minister Peter Lilley. It was a Fuller’s pub and as we raised our glasses of London Pride I asked him if the government could do something about the crippling level of excise duty the brewing industry paid.

His look suggested he thought I was a candidate for the funny farm. “Cut beer duty!” he exploded. “How do you think we would fund the NHS?”

I’ve never had to call upon the services of German or Spanish hospitals but they enjoy a good reputation without the need for the governments of those countries to hammer drinkers. The Belgian health service is modelled on the NHS but as beer there is considerably cheaper than in this country I have to assume the system works well without saddling drinkers with a big tax burden.

I don’t want to short change the NHS, especially after its heroic work during the pandemic. If it has to be, in part, funded by the tax on beer, then I would stand Peter Lilley’s argument on its head: if duty is cut then more people would visit pubs and drink more beer, with no loss to the exchequer.

One advantage of being outside the European Union is that Britain can now set differential rates of duty, which is not permitted under EU law. CAMRA has called for duty on all draught beer to be cut substantially in order that pubs can compete on a more level playing field with supermarkets and other retailers.

John Keeling, the former head brewer at Fuller’s and now chairman of the London Brewers Alliance, has fleshed out the CAMRA argument. John is a passionate devotee of cask beer and is alarmed that sales – before the 2020 lockdowns – were declining by 10 per cent a year.

John says there should be a 20 per cent cut in duty on cask beer to bring it down to the same level as cider. He points out that duty on 4.1 per cent cask ale is £78.22 per hectolitre while cider of the same strength pays £30.38 per hectolitre.

We don’t yet know how many pubs will have called “last orders” forever as a result of the lockdowns. The pubs that do survive need all the help they can get in order to remain at the heart of their communities – and that help must come by tackling the appalling burden of tax on beer.

First published in What’s Brewing, February 2021.