How the drinks trade reacted to the BudgetBy Lucy Shaw
With UK Chancellor Rishi Sunak having frozen alcohol duties for a second year and extended the 5% VAT rate for hospitality for six months, we’ve rounded up the reaction to yesterday’s budget from key members of the drinks trade.
Dayalan Nayager, managing director at Diageo GB
“We thank the Chancellor for providing much-needed stability by freezing alcohol duty. The last year has been incredibly tough and today’s decision, along with other measures to help the trade, gives the industry confidence to meet the ongoing challenges in these critical last months before reopening.
“Commitments such as Diageo’s £30m to help pubs and bars operate safely through our Raising the Bar, will give even further assurance. We now look ahead to the Alcohol Duty Review and welcome the opportunity to work with Government to bring greater fairness to the duty system and spirits producers across the UK.”
Kate Nicholls OBE, CEO of UKHospitality
“The Chancellor has listened to the concerns of the hospitality sector. Details are yet to be pored over but it looks like crucial support will help businesses at a critical time.
“The Chancellor has announced support to help our sector get back up and running, now it is vital that the Government sticks to its date of 21 June for a full reopening of the sector. Delay would see more businesses fail, more jobs lost and undo much of the good work the Chancellor has done to date.
“An extension of the 5% VAT rate was absolutely crucial for hospitality businesses. Confirmation that the Governmentwill provide support for a full year will bring peace of mind to the sector.
“It is now vital that the Government looks at introducing the interim rate for hospitality on a permanent basis. It would be a positive legacy of an otherwise dreadful year for our sector. A permanent reduced rate of VAT for hospitality would redress the unfair tax imbalance that our businesses have faced for too long and make us internationally competitive.”
Ian Wright CBE, CEO of the Food and Drink Federation
“Food and drink manufacturers will welcome today’s Budget. The Chancellor’s announcement struck the right balance between supporting recovery and acknowledging the difficult choices that have to be made to restore the country’s finances.
“Food and drink businesses supplying the hospitality and food service sectors will welcome the extension of the furlough scheme. However, we have concerns that support tapers too soon and should be kept under review.
“As the UK’s largest manufacturing sector, we welcome the news that the Bank of England and the Chancellor are doubling incentive payments for businesses hiring apprenticeships. However, increased flexibility of the apprenticeship levy would enable the system to work for the wider food and drink supply chain, particularly SMEs, and must be considered in relation to any new incentives.”
Karen Betts, CEO of The Scotch Whisky Association
“The freeze on duty announced by the Chancellor is good news for hospitality and gives distillers some breathing space in the face of some of the worst trading conditions anyone can remember – caused by a combination of US tariffs, the coronavirus pandemic and the end of the Brexit transition period.
“What’s really important to us is that the government redoubles its efforts to resolve the 25% tariff imposed by the US on Single Malt Scotch Whisky. This stems from an unresolved trade dispute between the EU, UK and US governments over subsidies to aerospace in breach of WTO rules.
“It is causing real damage to our US exports, which have fallen by over half a billion pounds since the tariff came into effect. And it risks impacting permanently Scotch Whisky’s market share in the US, which has long been one of our most successful markets.”
Emma McClarkin, CEO of the British Beer & Pub Association
“We welcome the Chancellor’s announcement of continued support for the devastated pub sector in the form of additional grants, as well as extensions to the job retention scheme, 5% hospitality VAT rate and business rates holiday.
“The new grants are worth £400 million for pubs and will go some way in helping many of them survive through to the time when they can reopen and operate viably. The extension of the job retention scheme until September will help save thousands of pub jobs. Worth £700 million to our pubs and brewers, it gives the sector time to reopen and rebuild trade before bringing all staff back.
“Extending the 5% VAT hospitality rate until September and at 12.5% thereafter is most welcome. We calculate it is worth £485 million to pubs. With all pubs having been closed for so long, the lower VAT rate has been of limited benefit so far, tens of thousands of pubs will not benefit from this until they reopen on 17th May at the earliest and then still at reduced capacity.
“Having called for a cut in beer duty and being a staunch supporter of the Long Live The Local campaign, a beer duty freeze will be seen as much needed short-term relief for the sector.”
James Calder, CEO of SIBA
“Today, the Chancellor spent an extraordinary amount of taxpayers money to help keep the economy moving and jobs protected, pledging almost fifty-nine billion to policies including furlough extensions, continued business rates cuts, grants for hospitality of up to £9k and a series of investment initiatives.
“Whilst this is helpful to the broad hospitality sector, it does nothing for the nation’s struggling independent breweries, who desperately needed direct tax cuts and targeted grant support to help them survive until the economy re-opens. What is the point in helping hospitality if there aren’t vibrant, diverse and local beers on offer when the economy re-opens?
“Breweries and wet led pubs will not benefit from the VAT cut extension as it does not apply to alcohol. Breweries will still be paying full business rates, VAT and duty and will not receive specific grant support – and whilst freezing beer duty is welcome, the Chancellor is still intending to increase the tax bill for at least 150 small breweries from next January with ruinous changes to small breweries’ relief, putting jobs and the recovery at risk.
“While this Budget will likely be celebrated by the broader hospitality sector, it comes as a disappointment to the Nation’s struggling small breweries and their supply chain, who have once again been de-prioritised by the Chancellor.”
Jodie Kidd, owner of The Half Moon pub in Kirdford
“A freeze in beer duty is a welcome relief to pubs like mine and clearly better than the planned increase. This is the third consecutive freeze in Beer Duty since our campaign began so I would like to thank everyone who supported the campaign – our collective voice is making a difference.
“However, The Chancellor has only partially listened to the 500,000 campaign supporters who signed the petition calling for a cut in beer duty. Our Government must recognise the vital role that local pubs and brewers can play in the much-needed social, cultural and economic recovery this country needs.
“I urge them at the earliest opportunity to address the unfairly high rate of beer duty in the UK which is 11 times higher than other countries such as Germany and Spain.”
Nick Mackenzie, CEO of Greene King
“The Chancellor has a shown welcome support for the pub sector extending the VAT cut, business rates and furlough, as well as a freeze to alcohol duty.
“While the business rates extension will help our tenants and smaller businesses, the £2m cap from the end of June, just nine days after planned full reopening, means larger businesses will be denied millions of pounds in vital relief at a critical time. This makes it more important than ever that the government sticks to the timetable for reopening.
“The Chancellor has placed the additional grants at the heart of his package of support for pubs, but it will make little difference if we are unable to access them due to State Aid Rules. We need government to clarify this urgently, and remove the cap to ensure all businesses can benefit.”
Nik Antona, national chairman of CAMRA
“Freezing alcohol duty is obviously better than a rise. However, CAMRA had hoped to see the Chancellor announce a cut in duty on beer served on tap in pubs and social clubs to benefit consumers and help the great British pub recover and thrive in the difficult months and years ahead by being able to compete with supermarket alcohol.
“The Government’s commitment to review alcohol duties in the coming months is welcome. CAMRA will continue to call for a lower rate of duty for beer served in pubs – an option available to the Government now we have left the European Union.
“Reducing tax on beer served in pubs and social clubs would encourage responsible drinking in a supervised, community setting – as well as boosting jobs and local economies, helping consumers and benefiting pubs and licensees.”