Beer duty cut supports 16,000 jobs, report finds

The ‘Cheers 2014’ report​​, produced by Oxford Economics on behalf of BBPA, CAMRA and SIBA, looked at the impact of the government’s decision to freeze the beer duty escalator and cut a penny off a pint in the 2013 and 2014 Budgets.

It found the cuts have helped kickstart the brewery and pub sector, with the UK beer market back in growth for the first time and sales up by one per cent for the year ending July 2014. Capital investment in the brewery and pub sector has already risen by 12 per cent fom £370m to £414m, creating 4,000 new jobs and 1,600 new apprenticeships.

Researchers claimed that by the end of 2015, an additional 520m pints will have been sold and 16,378 more people will work in the sector than if the escalator had been left in place.

Low cost to government​

The report also concluded that the cuts have come at a relatively low cost to the Treasury, because the lower duty revenue has been offset by rises in employment and sales related taxes.

Increased sales have also boosted beer duty receipts, which fell after the initial 2013 duty cut. According to data from HMRC, total beer duty receipts for the year ending June 2014 were worth £3,375 million, a 1.5 per cent year-on-year increase.

Researchers estimated that the cuts will cost the Treasury just £59m in 2014/15 and £115m in 2015/16.

Consumers have also benefitted from a slowdown in price increases, with prices for bitter and lager rising by just one per cent since the escalator was removed.

Boost for sector​

Welcoming the report, industry leaders called for the government to announce a third cut in beer duty in the 2015 Budget next March.

Brigid Simmonds, BBPA chief executive, said: “The Cheers report contains really good news, on jobs, on pubs, and on investment in our industry. I hope this boost for our sector results in further action on beer duty in the March Budget. A hat-trick would do very nicely!”

SIBA managing director Mike Benner said, “We were delighted to be able to present the Chancellor with a well-earned British beer, as a token of our gratitude for the two consecutive cuts in beer duty.

“For SIBA’s 800 or so brewers, this year’s duty cut was a second boost to their confidence in the long-term future for British beer, after many years of punitive taxation. With a government that seems committed to a thriving British brewing scene, our members are more comfortable about investing in their businesses, with positive impact on their local economies and employment.

“We hope that the government will continue to support this great British industry with more good news in the 2015 budget. If they are looking for evidence of of how lessening a sector’s tax burden can create confidence, investment and jobs, then Britain’s independent brewers can provide it in spades."