Reducing the tax paid on draught beer which is destined for the pub could create more than 8,000 extra jobs and result in a £265 million boost to the national economy, according to new research by the Centre for Economics and Business Research (Cebr).
It shows that setting the Draught Relief at 50% in the Autumn Budget could lead to a whopping 76 million extra pints being sold in pubs with £152 million in additional taxation going to the Treasury.
A more modest increase to 20% from its current 9.2% rate could still see an extra 2,251 jobs, 20 million more pints sold and £70 million for the economy with an increased contribution of £39 million to the Treasury with many of the costs being offset through additional sales and increases to other taxes.
The new research, commissioned by the Society of Independent Brewers and Associates (SIBA), the Campaign for Real Ale (CAMRA) and the British Institute of Innkeeping (BII), demonstrates the benefits to independent breweries, community pubs, consumers and the economy from expanding the Draught Relief.
Introduced last year, Draught Relief allows the Chancellor to finetune alcohol duty decisions to support the UK’s community pubs and brewing sector. It means that beer which is packaged into large containers such as kegs and casks and mostly sold across the bar in community pubs benefits from a lower rate of beer duty.
Currently alcohol duty is due to increase by RPI in February 2025 unless the Chancellor makes an announcement in the Autumn Budget in October. This comes at a time when fifty pubs a month have shut in the first half of the year and around 70 breweries have closed for good so far in 2024.
“Pubs and breweries make a huge contribution to our local communities but pay way more than their fair share of tax”, said Andy Slee, SIBA Chief Executive.
“This is the Chancellor’s opportunity in the Autumn Budget to use decisions around alcohol duty to provide targeted support to our pubs and independent breweries by increasing the Draught Relief to 20% or more."
“The Draught Relief is a new tool in the Chancellor’s toolkit that enables the Government to favour our pubs and breweries in the tax system which provide so much benefit to our local towns and cities,” commented Tom Stainer, CAMRA Chief Executive.
“Brewers and pubs are still recovering from the impacts of the pandemic and trading remains tough so increasing the Draught Relief to 20% would be a real boost for the sector."
“Boosting the Draught Relief would reduce the tax burden on thousands of pubs in every community and help to safeguard their futures”, said Steve Alton, BII Chief Executive.
“Our pubs are essential local businesses foundational in their local economies and at the heart of their communities.”
Notes to editors
The research by the Centre for Economics and Business Research (Cebr) for September 2024 shows that:
A 50% Draught Relief would create 8,584 additional full time equivalent jobs in brewing and the ontrade. It would see a £265,184,041 increase in ontrade GVA and £125,285,380 increase in brewing GVA (excluding duty). This would result in £132,009,488 in additional employee compensation and £152,364,583 in increased tax take across the supply chain, excluding changes in excise duty. It could see a 76,203,128 extra pints sold.
A 20% Draught Relief would create 2,251 additional full time equivalent jobs in brewing and the ontrade. It would see a £69,716,743 increase in ontrade GVA and £31,368,033 increase in brewing GVA (excluding duty). This would result in £34,213,642 in additional employee compensation and £39,319,787 in increased tax take across the supply chain, excluding changes in excise duty. It could see a 20,190,496 extra pints sold.
The Society of Independent Brewers and Associates (SIBA) was established in 1980 to represent the growing number of independent breweries in the UK. Today it has 700 members.
The Campaign for Real Ale (CAMRA) was founded in 1971 and represents more than 145,000 beer drinkers and pub goers. Its vision is to have quality real ale and thriving pubs in every community.
The British Institute of Innkeeping (BII) has been running for over 40 years and provides its 13,000 pub members with key support.
The Centre for Economics and Business Research (Cebr) has supplied independent forecasting and analysis for 25 years.
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