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Report warns that beer duty increase could be harmful

A new research report published today warns that if the Chancellor goes ahead with plans to increase beer duty in this month’s budget (16 March), the consequences could severely damage the pub and brewing industry.

The report by the Centre for Economics & Business Research (Cebr), commissioned by the Campaign for Real Ale (CAMRA), suggests an increase would halt by the end of the current parliament the momentum gained from three years of tax cuts, and further increases would cause a return to the all-time low in beer sales by 2020.

The government’s current commitment is to raise beer duty in line with inflation. Instead of an increase, CAMRA is recommending a 1p reduction in tax and a subsequent freeze over the rest of the parliament.

This, the report maintains, would trigger the creation of more jobs, an increase in investment and save more pubs from closing. The report estimates this proposal would see:

·         The creation of an additional 13,000 jobs in pubs and bars across the UK

·         An additional £75 million investment in the brewing industry by 2020

·         Just under 550 pubs saved from closure

Crucially, the beer and pub industry brings in £13 billion in tax revenue to the Exchequer each year and supports nearly 900,000 jobs.

The report also highlights the UK pays nearly 40% of all beer duty collected in the EU, yet provides just less than an eighth of the consumption.

CAMRA chief executive Tim Page, said: “This independent research from Cebr shows that any cut in beer duty is beneficial to both the entire pub and brewing industry and to the wider economy.

“Without the last three cuts, beer prices would be higher and there would be fewer pubs. A fourth cut would keep the price of a pint down and keep pubs open. If the Chancellor goes ahead and increases beer duty, the danger is that we could be placing all the benefits that have been achieved over the last three years at risk. In some cases that could mean jeopardising the existence of some breweries and pubs and the jobs of the large number of people that work for them. Crucially, it is the customer who could suffer with increased prices, a reduced choice of beers and a reduced choice of pubs to visit.”

Economist at the Cebr, Sam Alderson, added: “Three consecutive cuts to duty have helped to stem the decline of the British beer industry, saving over 1,000 pubs and supporting more than 26,000 additional jobs. However, with challenges including economic uncertainty and the introduction of the National Living Wage in 2016, it is clear that a further cut in duty should be considered in order to help sustain the momentum across the beer industry.”