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27-03-2011, 15:18
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Anyone reading this blog will quickly realise that I am not the greatest fan of the smoking ban. But, on the other hand, if you are running a pub or a brewery, you would be foolish to base your business plans on an assumption it may be repealed or relaxed in the next few years.

Equally, I am strongly, indeed viscerally opposed to the current alcohol duty regime, in particular the “duty escalator”. It penalises responsible drinkers, closes pubs and encourages smuggling while doing nothing to curb problem drinking and indeed not even being effective in maximising government revenue. But, given the current level of anti-drink hysteria in the political sphere, realistically the prospect of removing the escalator, let alone any actual cut, is extremely remote.

Before the Budget, various parts of the drinks industry mounted a concerted and heartfelt campaign to get the government to think again, most notably SIBA’s Proud of British Beer (http://siba.co.uk/2011/03/siba-shows-pride-in-british-beer/) video, but it all fell on deaf ears.

So, in your business plans, it makes sense to assume that the alcohol duty escalator will stay in place at least until 2014. The first realistic opportunity for it to be abandoned is in the pre-election Budget of March 2015.

Hardknott Dave makes a very good argument (http://hardknott.blogspot.com/2011/03/taxing-duty-of-adding-value.html) that, in the current climate, it makes sense for craft brewers to concentrate on quality rather than volume. A high tax regime increases the leverage exercised by quality. As often said in relation to wine, every bottle carries the same level of duty, so the differential between the £6 bottle and the £4 bottle is entirely (apart from the additional VAT) accounted for by higher quality.

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