IF members of the licensed trade had been able to sit down for a pint with Rishi Sunak in recent days, they would have had an interesting proposal for him.

They would have suggested that in the Chancellor of the Exchequer’s Autumn Budget, which Mr Sunak will present to the House of Commons tomorrow, he takes steps to lessen the level of alcohol duty paid in the pub trade, while simultaneously increasing the amount levied in the supermarket sector.

The Scottish Licensed Trade Association, which is endorsing a proposal first mooted by the former Scottish justice minister Kenny MacAskill, states there would be no difference to the overall revenue take by the Treasury from the change. But it argues that the move would provide a fillip to pub, bar and restaurant operators in their attempts to recover from the huge disruption to trade which has arisen from the pandemic.

Under the proposal, on-trade businesses would be able to claim a duty rebate. This would be offset by a higher rate of duty charged on alcohol sales in supermarkets in order to make the scheme revenue-neutral.

The supermarkets would likely oppose such a move in the most vigorous terms. It would force them to either put prices up or absorb this extra cost – at a time when supply chain disruption is contributing to significant inflation in the economy.

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But it could be argued that the off-trade, which accounts for the overwhelming amount of alcohol sold in the UK, has had a major advantage over the hospitality sector during the pandemic. Unlike the on-trade, supermarkets have remained open all the way through this health crisis.

Of course, the investment made by the major grocers to ensure food and drink supplies were able to reach consumers throughout lockdown should not be overlooked, and neither should the efforts of grocery staff over the last 18 months. Checkout staff, shelf stackers and store managers have not had the option to work from home as the pandemic has raged, and for many months will have put themselves on the front line without the protection provided by vaccines.

But, on a trading level, supermarkets have been able to profit from the sale of beers, wines and spirits when the shutters were down on pubs, bars and restaurants.

Moreover, in order to ensure their businesses were able to survive lockdown, many on-trade operators will have had no option but to increase their borrowings. They will have seen overheads go up during periods such as last winter, when trading was not even possible unless they had managed to move into the home-delivery market.

On the plus side, the furlough scheme meant that, until the end of September, a large part of the wage bills of on-trade businesses was picked up by the state.

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Some government grants were given to the on-trade during the pandemic, too, and there has been relief from business rates and a temporary reduction in value-added tax. But the combined effect of the various support measures has not been enough to cover the trade that has been lost.

Now, the on-trade is open once more, but trading conditions are seriously fragile. There is a massive staff shortage in the hospitality sector, energy bills and the cost of goods are rising, and soaring inflation is presenting a major risk to consumer confidence.

Meanwhile, controversy continues to rage over the introduction of the Scottish Government’s vaccine passport scheme, which became legally enforceable on October 18. Concerns emerged over the weekend that staff on the front line were abused from people denied entry because they did not have passports. Many venues decided to close early to avoid the new regulations, which dictate that passports are required for entry to “late-night premises with music” that have a “designated place for dancing for customers” and sell alcohol at any time between midnight and 5am.

At the same time, the support for the industry has all but gone.

The furlough scheme has ended, value-added tax has already been restored to 12.5 per cent from 5% (and is on track to return to 20% in April) and business rates relief will end early next year.

In these circumstances, the last thing the on-trade wants is having to decide whether to put prices up if Mr Sunak decides in his wisdom to increase alcohol duty in his Budget tomorrow.

Paul Waterson, hotelier and spokesman for the SLTA, told The Herald that the duty proposal tabled by his organisation would “kick-start the on-trade when it has been absolutely devastated by coronavirus regulations”, which he said the “off-trade has sailed through”.

“The big difference now is the Covid regulations and what we have been through over the last couple of years,” he said. “We need to try and boost [the trade]. We are seeing more and more places closed, we are seeing more and more places only opening part of the week, we are seeing problems with staff.”

He added: “If they are wanting to increase wages within businesses, they have got to give businesses the flexibility of the money to pay them. And we don’t have money. We have rates and VAT coming back in again. This would give some money back.”

Mr Waterson said the SLTA proposal is informed by a research paper by the Social Market Foundation from 2019, which makes the case for duty relief for pubs and focusing the tax on the off-trade.

“Where you have big home-drinking populations you have alcohol abuse,” he said. “It could be argued that it [the proposal] is an extension of minimum unit pricing, in a sense. It would bring some equilibrium back to the market, which is something minimum pricing has started.”

The Scottish on-trade is not the only part of the drinks industry that is concerned about the direction Mr Sunak will take on alcohol duty in tomorrow’s Budget. The Scotch Whisky Association has been campaigning vigorously for the Chancellor to not increase spirits duty further in the Budget, and to make good on a commitment made in 2019 to review the current system.

In a social media campaign, the organisation has been highlighting that taxation already accounts for 70% of the cost of a bottle of Scotch whisky and, in its submission to the Treasury ahead of the Budget, states the recovery of the industry and wider economy, including retail, tourism, hospitality and manufacturing, would be jeopardised by a duty rise.

“In short, the Chancellor has a choice – keep the recovery on track or add further pressure on business by further raising the tax burden on the industry,” the SWA said. Mr Sunak has doubtless had plenty of thinking to do. It is to be hoped the decisions he makes will be to the good of some of Scotland’s most important industries.