You can tell when a story is important; it appears in the back pages (the serious bit) of Private Eye (No. 1530). Firstly, as the legislation is worded in hectolitres (hl), I will use that unit of measurement. For those not used to it (and I still struggle), a hectolitre is equivalent to 22 Imperial (UK) gallons or 176 pints.
Next, some history. What was originally called Progressive Beer Duty was introduced in 2002 by the then Chancellor of the Exchequer, Gordon Brown. Its aim was to assist with the establishment and growth of small breweries, the thinking being that they needed financial assistance because they were too small to benefit from the economies of scale from which their larger brethren benefited. It was primarily campaigned for by the Society of Independent Brewers (SIBA) although CAMRA also lobbied for it, looking to see an increase in choice. This was in the wake of the failure of the guest beer policy that had been introduced under the Beer Orders.
If a brewery produces less than 5,000 hl per annum, the beer duty that they pay is reduced by 50%. There are smaller allowances for those producing between 5,001 and 30,000 and 30,001 and 60,000 hl which work on a sliding scale. I haven’t got space here to explain the calculations. HMRC’s Excise Notice 226: Beer Duty and The Beer from Small Breweries (Extension of Reduced Rates of excise duty) Order 2004 (SI 2004/1296) will tell you all you need to know.
A number of breweries that fall in the gap between 60,000 hl and the vast amounts brewed by the mega-keggeries feel hard done by because the small brewers are able to undercut them. Several, including Bateman’s, McMullen’s, Everard’s and Thwaites, have downsized as a consequence. They also feel that the ‘cliff edge’ between the reduced rate of duty at 5,000 hl and the next band is a disincentive to expansion and development. A group called the Small Brewers Duty Reform Coalition (SBDRC) was formed to lobby for change.
As mentioned in the last edition, the Government has promised a full review of alcohol duty, over which it will have full control after 1 January. Although the Treasury had been reviewing SBDR since 2018, it came as a surprise that the Government should have introduced changes to SBDR at this time. The proposal is that the lower limit will drop to 2,100 hl. A consultation on the technical aspects of the introduction of this change is to come. According to James Calder, the chief executive of SIBA, there are some 150 breweries in the 2,101 hl to 5,000 hl band who will see an increase in their duty payments when SIBA have always argued that no brewery should lose any relief as the result of any reform. Mr Calder also made the point that, during the COVID crisis, breweries have not benefited from the help that much of the hospitality sector received, such as a business rates holiday or cash grants.
A petition asking the Government to think again has been started on the UK Parliament petitions website. If it gets to 100,000 signatures, the issue will be debated in Parliament. Details are below. You will see that a London brewery, Anspach & Hobday is one of the sponsors. There is a good argument for the reform of SBDR but the Government’s proposal is not the answer. Consequently, CAMRA is encouraging members to sign the petition.
Sadly, the issue is causing a rift between brewers, especially with the British Beer & Pub Association welcoming the proposals. It would be very sad if this persisted, given all the other problems that currently beset the industry. While the Treasury will no doubt want any solution to be ‘tax neutral’ (so that they still get the same income from it), let us hope that an amicable and equitable solution can be found.
Finally, one aspect of the debate that I have not liked is that some campaigners against the reform have started rubbishing the beers produced by the middle-sized brewers. That is unfair and simply wrong. The likes of Harvey’s, Hook Norton, Holt’s and Timothy Taylor’s deserve to be respected for the enduring quality of their beer.