Chancellor Jeremy Hunt has announced that the duty of draught beer in UK pubs will be frozen in a move to help the struggling hospitality and on trade sector.
The new policy has been dubbed the “Brexit Pub Guarantee” and ensures “pubs will always pay less tax on a pint compared to supermarkets” as a Chancellor plans to “increase the generosity of draft relief”.
The Treasury said: “The duty on average strength draught beer sold in pubs across the UK will be frozen. This will help the hospitality sector including pubs and restaurants.”
This would mean that the duty paid for draught beer in pubs would be 11p lower than the tax paid by supermarkets.
The Chancellor said: “Today, I will do something that was not possible when we were in the EU and significantly increase the generosity of Draught Relief, so that from 1 August the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee.
“British ale may be warm, but the duty on a pint is frozen.” The Chancellor added.
Taking to Twitter UK hospitality CEO Kate Nicholls said that it was vital for brewers to pass the relief onto pubs to ensure that it delivers against government objectives.
Lionel Benjamin, AGO Hotels co-founder, said:
“With the continuing economic struggles facing SMEs, businesses were looking at today’s Budget to provide a lifeline. It fell short.
“It was disappointing that the Chancellor did not reverse next month’s corporation tax rise. With double-digit inflation and rising bills, this means further costs for businesses which we are trying not to pass onto the consumer, but it is becoming more difficult not to do so, and in the coming months we may see more businesses close their doors.”
“Hunt did make announcements aimed at boosting the economy including 12 new investment zones, regeneration projects in key town centres and business rate retention, giving local authorities more control on spending. However, the devil will be in the detail and we believe that specific incentives are needed around the regeneration of city centre buildings, particularly those which are closed, to be converted into hotels.”
“At AGO Hotels we are calling for a reduction of output VAT to 10%, widening the scope of capital allowances offered to encourage development and ESG investments, and a comprehensive review and reduction of the widely outdated system of business rates. For the hospitality sector to thrive and survive we need more.”
Sacha Lord, the Night Time Economy Adviser for Greater Manchester, said:
“While the announcement on beer duties will enable operators to become more competitive against supermarkets and retailers, the current situation for the hospitality sector continues to be dire.
“In the face of rising bills, business rates and inflation, operators urgently need ongoing support and the Chancellor’s announcements, or lack of them, will only further frustrate and anger the industry.
“By its very nature, hospitality is an industry with higher-than-average gas and electricity usage, and is a sector that has seen incredible economic damage over the past three years.
‘It is therefore disappointing that the Chancellor has not announced a delay to the planned decrease in business energy support or any sector-specific package for the industry.
“The tapering off of business energy support from the end of March has been forecasted to add £4.5 billion to bills compared to the current scheme, and simply put, this will place the industry in an unsustainable predicament and create a sinkhole of financial difficulty for venues across the sector.
“A third of businesses are already cutting trading days as a result of spiralling energy bills and today operators will be even more concerned over how they will continue to pay bills and wages.
“Without energy support, a rise in insolvencies is inevitable as operators conclude the reality of running a business in hospitality is simply no longer financially viable.
“Sadly it is the smaller, independent and often family-run businesses which are taking the brunt of the economic downturn, and who once again are at the precipice of closure.
“I urge the Government and Treasury to reconsider its level of support for the UK’s fifth largest industry to avoid these unnecessary closures and job losses. We are an industry that has historically contributed £66 billion per year to the UK economy pre-Covid, and with the right intervention, I have no doubt the sector can thrive once again and aid the economic growth of this country.”
On the announcement that Greater Manchester will become one of a handful of ‘investment zones’, Lord said, “Greater Manchester is regularly outpacing London as a centre of economic growth and investment in the UK, and I’m pleased this is being recognised by the Chancellor. The Investment Zone announcement will instil an even greater confidence in the city-region by overseas investors and UK companies ripe for expansion.”