BEER DUTY - the blog

Keeping up the Pressure

After many hours of research I have now compiled a report on the impact of the Beer Duty Escalator. I have sent the report to my MP who promised to continue a dialogue started last year with the Treasury. Fingers crossed that there are enough of us piling on the pressure that Government will actually make some changes.

My main message to the Government is not just to abolish the Beer Duty Escalator but to make a reduction in duty payable next year to redress the problem they have created by raising duty too high in the last Budget.

Having now looked in some detail at HM Revenue and Customs figures for revenue generated by beer and other alcoholic drinks, I can safely assert that the Government and Treasury have been shooting themselves in the foot by continually allowing the escalator to ramp up duty payments. We have now got to a point where the rate of decline in the amount of beer being sold and consumed in UK has overtaken the rate of increase in duty being levied. Up until this year income generated by the duty payable continued to rise despite falling sales (due to the increase in duty payable), but now the income to the Treasury is falling too. Or to put it another way the 'cash cow' is being milked dry.

Anyone interested in reading the report can see it by following this link:

Beer Duty Escalator Report

For those who just want the headlines:

  • The Beer Duty Escalator was introduced at a time of pay rises and prosperity. We are no longer in such times

  • Beer consumption, beer production and beer clearances have fallen over the last few years. The only exception to this downward trend is the success of the microbrewery sector

  • Total beer duty revenue for the Treasury continued to increase over the last few years as the increase in duty payable compensated for the declining consumption of beer. However this trend has started to reverse and income is now falling
  • UK breweries pay a disproportionately high amount of duty compared to all the other major beer producing countries within the EU

  • Consumers are shifting from drinking beer to drinking wine and spirits. This is not due to a change of consumer taste, but is due to price increases directly attributable to beer duty

  • The Government are contradicting their stated aims for the beer and pub industry by driving consumers away from beer which also contradicts their aims to promote responsible drinking

The only beacon of light that shines amongst the gloomy facts and figure supporting the statements above is the amazing success of microbreweries within the beer industry. However, even this vibrant sector will start struggling if sense doesn't prevail soon. But will the Chancellor take the only sensible course of action?