Government Leading the Cash Cow to the Slaughter House
21 March 2012
Despite today’s announcement by the Chancellor that there would be no change to alcohol duty, the industry will actually face a 5.7% increase in tax due to the beer duty escalator already in place and will in fact lose money on every pint sold at £3.
Commenting on today’s announcement, Colin Neill, chief executive of Pubs of Ulster said:
“Today’s announcement by the Chancellor that there will be no change to alcohol duty is, on the surface, good news for the industry. However, a closer look reveals that the move is nothing more than smoke and mirrors, as the Chancellor failed to mention that the beer duty escalator- originally introduced to the Budget by the previous Labour government in 2008 – will remain in place.
“This news will come as no surprise to many in the industry as the government has often viewed the industry as a lucrative cash cow. By continuing to apply the duty escalator, the industry now in fact faces an increase in duty of 2 per cent above the rate of inflation. This equates to an overall duty increase of 5.7 per cent, which in real terms will add approximately 10 pence to the price of a pint. Most worryingly however, this duty will now mean that publicans are in fact losing approximately 2 pence on a standard £3 pint of beer.
“It has become increasingly difficult for pubs to operate in the current economic climate and the on-going unfair taxation on the industry could sound the final death knell for many. This move could also be bad news for customers, who could be faced with paying more for their pint if pubs cannot afford to absorb the duty increase and the subsequent loss in profit. Faced with on-going economic pressure and a sharp fall in profit margins, it is increasingly unlikely that many pubs will be able to protect their customers.
“The danger is, faced with paying more for a pint in their local pub, people could now opt to avail of the cheap alcohol on offer in supermarkets. This could fuel the problem of people consuming alcohol in an uncontrolled environment, leading to a possible increase in alcohol related health and social problems; an issue that we have all become increasingly aware of in recent weeks.
“The move by the Chancellor will only add more pressure to an industry already struggling to survive. Given that the night time economy in the UK generates £66 billion and employs 1.2 million people- compared to the £10 billion generated by the motor industry and £30 billion by the fashion industry- we would expect the government to provide greater support to an industry that contributes so much to the on-going economic recovery. With the livelihoods of thousands of people employed throughout the industry in real danger, Pubs of Ulster calls on the government and the Northern Ireland Assembly to support an industry that is a vital part of our society and economy.”