Boris and Rishi roll out the wrong barrels: Chancellor and PM are left red-faced after posing with kegs which WON’T qualify for beer duty cut
Insiders claimed the Treasury was always expecting to revisit the move after talks with industry leaders over the next few months.
The Chancellor announced in his Budget on Wednesday a tax cut will only affect 40l kegs of beer and cider – not the 30l ones used by craft breweries.
Later in the day the PM and Mr Sunak visited a London beer factory to pose for pictures to promote the new relief.
But they were left red-faced when it was pointed out the barrels from Fourpure Brewery in Bermondsey were too small to classify.
Boris Johnson and Rishi Sunak were left red-faced when it was pointed out the barrels from Fourpure Brewery in Bermondsey were too small to classify (pictured on Wednesday)
In addition to the beer duty cut, Rishi Sunak also announced a planned increase to the duty on lower-strength spirits, wine, cider and beer will be cancelled. The changes will see the tax take increase on some drinks and decrease on others
What are the main changes to the alcohol tax system?
– Duty rates for draught beer and cider will be cut by five per cent – taking three pence off a pint.
– Duty rate on draught fruit cider will be equalised with beer, cutting the rate on fruit cider by 20 per cent, taking 13 pence off a pint.
– All products will be taxed according to their Alcohol By Volume (ABV), cutting duty on lighter wines and cider. Tax on a 10.5% bottle of Rose will decrease by 23 pence per bottle. But the levy on white ciders and stronger still wines will go up.
– Sparkling wine will be taxed at the same rate as still wine, ending the 28 per cent premium currently applied to the product.
Sources told the Times the government always planned to negotiate the limit after a consultation with industry bosses ending in January.
The Treasury told the newspaper: ‘We intend for most draught beer for sale in pubs to qualify for the relief, including where it’s made by smaller or craft brewers.
‘We are consulting industry on the criteria to ensure that the relief supports pubs rather than supermarkets, given that smaller kegs are also sold for drinking at home.’
The FT reported the Treasury could change the size cap following pressure from pubs and breweries.
Industry leaders have rubbished the idea Britons will make a saving on beer and fizz as a result of the changes announced in the Budget.
Mr Sunak boasted of a ‘once in a generation’ reduction in the duty imposed on beer and cider sold on draught in pubs and bars.
It was suggested the reforms would deliver a saving of around 3p a pint and Mr Sunak argued this would provide a lifeline to community pubs.
But the changes are not due to come into effect until February 2023 and will be swamped by increases in costs that could add 25p-30p to the cost of a pint.
The brewing and hospitality industry has been hammered during the pandemic with repeated lockdowns. They are now wrestling with punishing increases in costs, such as energy, transport and labour.
The Budget included small print rules that will limit the benefit of the promised reduction in duty on draught beer and cider to drink sold in kegs and casks containing at least 40 litres.
Most small, craft brewers and the pubs they serve operate on smaller 30ltr containers, which means they miss out of the reduction
Boris Johnson is pictured on a visit to Fourpure Brewery in Bermondsey, London, after the Budget on Wednesday
The changes were a central plank of the Budget and both the teetotal Chancellor and Boris Johnson took park in a publicity stunt to highlight them at the Fourpure Brewing Company, in Bermondsey, London. However, they are now unravelling under the scrutiny of industry leaders.
Vice chairman of the Campaign for Pubs, Dawn Hopkins, the owner of the Rose Inn, Norwich, said: ‘There’s no way this will lead to a change in prices across the bar.
‘Prices are soaring and these changes won’t come in until 2023 anyway. It also discriminates against craft beer breweries by excluding smaller kegs.’
Director of the campaign, Gary Murphy, said it is ‘highly unlikely’ that the price of a pint will fall.
‘The idea that we’re going to get pints 3p cheaper is frankly ludicrous. The challenges are far greater than the crumbs that are being offered,’ he said.
The Chancellor announced in his Budget on Wednesday a tax cut will only affect 40l kegs of beer and cider – not the 30l ones used by craft breweries (pictured on Wednesday)
Jonathan Neame, chief executive of Shepherd Neame, said the company would pass on the 3p-a-pint duty cut on kegs it sells wholesale to landlords, but drinkers are unlikely to see the benefit.
He told Radio 4’s Today programme: ‘We will pass on the duty cut at a wholesale, but in all honesty, pubs are facing between 25 to 30p per pint inflation and this will do will take the top off that.
‘It will reduce the rate of increase, but there is roughly 14per cent inflation impacting most hospitality businesses. So, while I’d love to say the price of beer will come down, its very hard to see that because a lot of inflation is still coming down the track in terms of energy and food etc.’
The Chancellor also promised to abolish a super-tax that applies to sparkling wine, prosecco and champagne in a reform that will see tax based on alcohol strength.
In theory, this could reduce the price by around 53p a bottle, but again this is likely to be swamped by big increases in the cost of wine production, imports and hospitality industry costs.
The Government insists the reform of alcohol duties to base them on strength will deliver real reductions. Treasury documents put the value of these at £20m in 2022-23 and £115m the following year.