Cheers for beer but not spirits

Group business correspondent

Thursday 21 March 2013

THE Scotch whisky industry has reacted furiously to George Osborne's move to raise spirits duty, but brewers and pub groups toasted the Chancellor for scrapping the alcohol duty escalator for beer and knocking 1p off the price of a pint.

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SCOTT WRIGHT

Alcohol duty has increased by two percentage points above the annual inflation rate since the escalator was introduced by Labour in 2008. It will still apply to wine, spirits and cider until it is reviewed in 2015.

The Scotch Whisky Association (SWA), which represents about 90% of distillers in Scotland, slammed the decision to hike spirits tax as an attack on a major British business.It said the move was at odds with the Chancellor's support for the industry's pursuit of a free trade agreement for Scotch in India, and the Government's aim of boosting UK exports.The latest figures from the SWA show whisky exports were worth £4.23 billion to the UK in the year to May 31, 2012, and the industry supported 35,000 jobs.Campbell Evans, director of the SWA, said: "It is hugely disappointing and an attack on the Scotch whisky industry. "It's really bizarre, given that five or 10 minutes before he was singing the praises of the opportunities of the India free trade agreement and other free trade agreements. He was talking about backing business that is growing exports. The one industry that qualifies on both of those counts is the one he then decided to hammer at home."Miles Beale, chief executive of the Wine and Spirit Trade Association, claimed that scrapping the escalator for beer but retaining it on wine could be illegal under EU law. He cited a European Court of Justice (ECJ) case from 1983, which said that, because beer and wine were competing products and fall under the same category of alcoholic beverage, they should be taxed at the same rate.Mr Beale said: "We supported the beer campaign [to end the duty escalator] because we didn't think they would differentiate between products. We still think legally that it's not possible – the ECJ case from 1983 has held ground for 30 years. We're looking into it."But brewers and pub groups celebrated the tax cut and the end of the escalator for beer.Rooney Anand, chief executive of Greene King – owner of Dunbar-based brewer and pub group Belhaven – said: "Greene King welcomes the Chancellor's supportive Budget for business. "We applaud his decision to scrap the beer duty escalator, which has been so damaging to our industry, and to reduce beer duty by 1p per pint."These measures are a real boost to the great British pub."Paul Waterson, chief executive of the Scottish Licensed Trade Association, said the duty moves showed the Government was aware of the challenges pubs face.He said: "The important thing here is that Government realises the predicament pubs face by mentioning the 10,000 pubs that have closed. Not only has he stopped the escalator, he has given us a penny back. "In that way it's positive because it gives us the launchpad to talk about other things."However, Mr Evans was scathing at the suggestion the Budget would help pubs.He said: "There was no suggestion this was anything other than a populist move."Bizarrely, this is supposed to be about getting people back into pubs. But 40% of pub sales are spirits and wine. "The pubs are still going to get hammered because 40% of their business has just gone up by about 5% in tax – never mind the overheads on top of that."He has actually slammed 40% of pub business."

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Cheers for beer but not spirits

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