The Society of Independent Brewers (SIBA) has set out its proposals for how Small Breweries’ Relief (SBR) can be enhanced to encourage job creation, investment and growth in British independent brewing whilst protecting our flourishing small craft brewers.
SIBA is calling on brewers of all sizes, publicans, pub companies and lovers of British independent craft beer to back our proposals for positive reform. Our proposals, if adopted will improve an already successful Government policy, which has fuelled the unprecedented growth in craft beer, creating enormous choice and diversity for beer drinkers.
SIBA has written to HM Treasury calling for:
Positive changes to the shape of the relief curve for breweries making over 5,000 hectolitres (hl) of beer per year to encourage further growth, removing the ‘cliff edge’ that currently exists as the relief is rapidly withdrawn.
No withdrawal of relief for any brewer below 5,000hl to safeguard the viability of smaller businesses that depend on SBR at current levels.
Support for an industry-led review at least every five years to ensure SBR continues to work well and promotes sustainability in the sector.
New measures to encourage normal mergers and acquisitions activity.
Removal of beer that is exported from the SBR calculation to encourage export activity.
An extension of the scheme to brewers up to 200,000hl as permitted under EU law.
Alongside these recommendations SIBA publishes its model for reform, outlining how changes can be made to the relief curve and what this means in cash terms on every barrel of beer brewers make. SIBA also publishes a report from the respected Centre for Economic and Business Research (CEBR), which examines how SBR is working and how it can be reformed.
Industry is now united in the need for reform. There is also broad agreement on the majority of the key areas for reform amongst industry stakeholders.
However, the Small Brewers Duty Reform Coalition (the Coalition) demand for withdrawal of relief below 5,000hl is not supported by SIBA. We know that any attempts to redistribute duty relief from smaller to larger brewers would threaten the viability of many SIBA members up and down the country. That is contrary to the original intention of small brewers relief – a progressive beer duty. There is no convincing rationale for removing relief from small brewers to ‘compensate’ larger brewers.
SIBA’s model projects around £9.2m of foregone revenue from Government per year to smooth the curve above 5,000hl. The Coalition’s model predicts a cost of around £10m per year. However, with SIBA’s model, no brewery loses out. The growth, investment and job creation created as a result of these policy changes would in time help to offset the foregoing of duty by Treasury.
Mike Benner, Chief Executive said;
“SIBA was responsible for convincing Government to introduce SBR in 2002 and to improve it in 2004. Now, SIBA are leading the way to make SBR fit for the radically different beer market we have today. We believe small changes can be made to an already winning formula with a modest impact on Treasury coffers. We believe our proposals present a strong case for reform.”
Mike went on to say:
“Reform is needed to remove the ‘cliff edge’ to growth that exists. However, that reform shouldn’t come at the expense of smaller brewers currently in receipt of the full level of relief. We’re now calling on everyone in the industry, big or small, to look at SIBA’s proposals and back our case for reform in the November Budget.”
Ian Fozard, newly elected SIBA chairman, chairman of Roosters Brewery and lead financial adviser to SIBA’s advisory group on SBR reform said,
“Our proposals for reform are rooted in a deep understanding of how breweries work. Their costs, their motivations and their experiences of growth that we’ve derived from our wide and diverse membership base. We have a model of reform that works, and that we think Treasury will adopt.”
Ian went on to say:
“We now have an opportunity to gather industry support and press to reform small breweries’ relief ahead of the November budget. But SIBA will also be campaigning in the run up to the Budget on the two core issues that affect the whole industry. We all know the headline rate of beer duty remains too high and the burden on pubs through business rates is unsustainable. The beer and pubs industry has a number of challenges ahead, but SIBA will be leading the way for our members.”