Craft Breweries “Furious” At Rishi Sunak’s Draught Relief Which “Directly Discriminates” Against Them
Rishi Sunak announced a new "draught relief" lowering duty on beer but craft breweries say it will not benefit them (Alamy)
5 min read
The craft brewing industry has reacted with fury at Rishi Sunak’s plan to offer “draught relief” to pubs saying it will only benefit big corporations and “directly discriminates” against the UK’s world-renowned independent breweries.
In this afternoon’s Budget the Chancellor announced a raft of reforms to the way alcohol is taxed, saying the current duty system is “outdated, complex and full of historical anomalies”.
One of them was “draught relief”, which will cut duty on draught beer and cider by 5% in a bid to support pubs that have been hard-hit by pandemic closures.
"It will particularly benefit community pubs who do 75% of their trade on draught,” Sunak told MPs.
He said it was the “biggest cut to cider duty since 1923” and the “biggest cut to beer duty for 50 years”, claiming it will result in a “permanent cut in the cost of a pint by 3p”.
But Greg Mulholland, a former MP and campaign director at the Campaign for Pubs, dismissed the proposals, saying “all this talk about ‘3p off a pint’ is nonsense”, and brewers have already told pubs prices are all going up by 5% anyway due to supply chain costs and inflation.
He also strongly criticised the decision to only offer the new relief to containers over 40 litres, pointing out small breweries use 30 litre kegs, so will not be eligible, while macro breweries use 50 litre kegs.
“The way government have listened to the big brewers on the 40litre limit is scandalous, it directly discriminates against all the wonderful indies and micros, cask and craft!” he told PoliticsHome.
Paul Jones, who owns the award-winning independent Cloudwater brewery in Manchester, tweeted that he was “absolutely furious at this point”.
He said: “This smacks of another Budget in favour of the largest companies, with the whole craft sector left hanging without details of duty changes. They’re setting us up for a battle of the deepest pockets.
“Those that can afford to pass on tax relief and scale to 50 litre containers will be flying, but that’s not the majority of craft beer at all.”
A Hoppy Place, an independent beer retailer in Windsor, also criticised the plans, said that people should “not be fooled” by the Budget proposals on draught relief.
“Nearly all craft beer comes in 30s, for good reason,” they tweeted. “This is a move to gain breaks for managed pub chains and help the big family brewers and the biggest macro brands. It does nothing for small indy business.”
Jez Lamb, founder of alcohol home delivery firm Beers@No42, said: "The devil's always in the detail. It's brilliant to see alcohol duty cut on draught beer but that's only for 'containers' more than 40 litres.
“This is great for the big breweries but so many smaller craft brewers only supply in 30 litre containers. This just further supports the big players in the market, not supporting the smaller, independent breweries who need support most."
Craft beer distributor Jolly Good Beer said over 90% of their draught sales are 30 litre kegs from independent microbreweries, which will not see any benefit from the policy.
“As far as I can see this puts my entire market sector of small and independent UK businesses at a disadvantage, in favour of multi-national interests,” the company tweeted.
James Calder, chief executive of the Society of Independent Brewers, said the industry had been calling for draught relief “to apply to everything over 20 litres” so it benefitted the craft beer industry.
He said overall the policy was a positive "once in a generation" move for cask beer and pubs, but the 40 litre limit needed to be lowered.
With an ongoing consultation ahead of the relief being brought in Calder added: "I'm confident we can get that changed to benefit all indy brewers."
In response the Treasury said the 40 litre rule was created to avoid diverting beer sales to “off trade and supermarkets” so the relief will focus help on pubs.
They also pointed out that craft brewers who produce below a certain volume of beer each year are already eligible for the government's "Small Brewers Relief" scheme.
Sunak also said in the Budget that as well as simplifying the alcohol tax rules by slashing the number of main duty rates from fifteen to six, the government will add to the cost of stronger red wines, fortified wines, or high-strength ciders, saying they had been historically under-taxed.
But the Chancellor revealed many lower alcohol drinks like rosé wine, fruit ciders, liqueurs, weaker strength beers and wines will have their duty reduced, meaning lower prices for the consumer
He also announced an extension to the Small Brewers Relief to include cidermakers and other producers making alcoholic drinks of less than 8.5% ABV, ending the “irrational duty premium of 28%” placed on sparkling wines in an attempt to boost UK producers.
Because these changes will not come into effect until February 2023, he moved to help the hospitality industry immediately by confirming the planned increase in duty on spirits like Scotch Whisky, wine, cider and beer, “from midnight tonight be cancelled”.
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