Budget 2014: George Osborne scraps alcohol duty escalator
In what he called ‘a Budget for the makers, the doers and the savers’, Osborne said the duty paid on whiskey, other spirits, and 'ordinary cider' will also be frozen and not rise with inflation.
“Today I’m scrapping that escalator for all alcohol duties,” Osborne told a jubilant House of Commons this afternoon (19 March). “Beer duty will not be frozen; it will be cut again by 1p.
"Pubs saved, jobs created, a penny off a pint for the second year running.”
Chancellor: "Beer duty next week will not be frozen - it will be cut again by a penny" #Budget2014pic.twitter.com/IKTDLR9EHh
— HM Treasury (@hmtreasury) March 19, 2014
The Beer Duty Escalator is a policy causing tax on beer to automatically increase by 2 per cent above inflation every year. Since its launch in 2008, beer tax increased by 50 per cent, forcing over 6,000 pubs to close their doors, with 62,000 jobs lost.
Long overdue
This second, historic beer cut makes Osborne the first Chancellor to cut beer duty two years in a row since records began. It marks the culmination of another year of campaigning from pubs, brewers and industry bodies including the British Beer and Pub Association (BBPA) and the Campaign for Real Ale (Camra).
“Fantastic news, @George_Osborne is again the toast of Britain’s brewers, pubs and pubgoers" says @BrigidSimmonds#Budget2014
— BBPA Official (@beerandpub) March 19, 2014Brigid Simmonds, chief executive of the BBPA, said: “This is fantastic news, and George Osborne is again the toast of Britain’s brewers, pubs and pub-goers. It will protect over 7,000 jobs over two years, mostly jobs of younger people in Britain’s pubs.
“It also shows that the Government has understood our case, that taxes on British beer had become far too high, and action was long overdue. I hope this becomes a trend in future budgets for this British-made, lower-strength drink.”
More good news...
The support for the British beer and pub industry didn't stop there. Osborne announced that export finance will doubled to £3bn and interest rates on loans will cut by one third - good news for brewers looking to export. "We are backing our exporters so that wherever you are around the world you cannot fail to see ‘made in Britain,’" added Osborne.
While this is all good news for pubs, the rest of the hospitality industry also had a few reasons to raise a glass. Osborne first announced that the Government will extend the grant for small businesses to support 100,000 more apprenticeships. This follows a hugely successful National Apprenticeship Week, during which the Mayor of London Boris Johnson said 'apprenticeships are a fantastic way of getting young people into any kind of work'.
Moreover, Osborne said business rates discounts in enterprise zones will be extended for another three years, and the Annual Investment Allowance for businesses will be doubled to £500,000 until the end of 2015 - meaning 99.8 per cent of businesses will pay no tax on investment at all.
As widely predicted, the income tax allowance will again be increased, to £10,500, equating to £800 less in tax every year for the typical tax payer.
Osborne also announced that the Government will make the Seed Enterprise Investment Scheme (SEIS) permanent, two years after its initial launch. The initiative helps start-ups in the UK that are seeking funding; allowing SEIS investors to commit up to £150,000 in a single company and in return receive tax relief of 50 per cent on their income tax for the year that the investment is made.
What wasn't mentioned?
Ahead of the Chancellor's speech at 12:30pm, Treasury sources said the government's economic plan was working but the job was 'far from done'. Hospitality businesses and organisations across the UK got in touch with BigHospitality to explain exactly what they wanted from the 2014 Budget.
But, amidst another Budget full of big announcements and political grandstanding, there were, as usual, some key issues that weren’t mentioned.
- VAT cut - Industry bodies such as the British Hospitality Association (BHA) would have welcomed a cut in VAT for the hospitality and tourism industries but, as the previous Hospitality Minister told BigHospitality,the Chancellor would be hard-pressed to cut VAT for the hospitality industry and not others.
- Enterprise Investment Scheme changes - Hoteliers, who are themselves facing high VAT rates and extensive planning delays, had been hoping for a change in the Enterprise Investment Scheme (EIS) to include hotels. But again, nothing was announced. “An EIS change would be potentially very good news for many businesses and their investors, because it would encourage investment in the industry through new sources of finance,” the BHAs deputy chief executive Martin Couchman told BigHospitality.
- Enterprise Investment Allowance / Annual Investment Allowance - The BHA had written a letter to Osborne before today's Budget announcement; urging him to pay some attention to both of these allowances. But the Chancellor appears to have turned a blind eye on both fronts.And
Readers' Poll: Budget 2014
So... What do you think? Will the likes of the business rates discounts and Annual Investment Allowance help your business? Or do you agree that George Osborne once again avoided the bigger issues that continue to have a punitive impact on the industry? Was it ultimately a good Budget for hospitality? Cast your VOTE in the poll below.
