{"id":1624,"date":"2021-03-29T10:36:20","date_gmt":"2021-03-29T10:36:20","guid":{"rendered":"https:\/\/londondrinker.camra.org.uk\/wordpress\/?p=1624"},"modified":"2021-03-29T19:11:06","modified_gmt":"2021-03-29T19:11:06","slug":"the-budget","status":"publish","type":"post","link":"https:\/\/londondrinker.camra.org.uk\/wordpress\/index.php\/2021\/03\/29\/the-budget\/","title":{"rendered":"The Budget"},"content":{"rendered":"\n

There was a budget on 3 March. As a continuation of its #PubsMatter <\/em>campaign, CAMRA asked its members to email their MPs in advance of the day, asking the MPs to lobby the Chancellor of the Exchequer for help for our beleaguered pubs, clubs, brewers and cider makers. Specifically, CAMRA wanted to see:<\/p>\n\n\n\n

\u2022 A lower rate of duty on draught beer, to encourage people back into pubs when they reopen;<\/p>\n\n\n\n

\u2022 An extension to the VAT reduction, and for it to apply to alcohol sales;<\/p>\n\n\n\n

\u2022 The cancellation of business rates for another year;<\/p>\n\n\n\n

\u2022 The furlough scheme extended until every pub is properly open again.<\/p>\n\n\n\n

So what did we get? Well, not a lot really. Duty on alcohol was simply frozen for a second year (see below). There was no change to the system itself, although it is under review. It had been announced in advance that the Government had no plans to extend the reduction in VAT beyond 31 March, but it was in fact extended to 30 September. It will then increase to 12.5% and return to the full 20% rate from April 2022. It was not however extended to alcohol sales and so continues to be of little help to wet-led pubs.<\/p>\n\n\n\n

Similarly, business rates for the hospitality sector will continue to be frozen but only until the end of June. From 1 July business rates will be charged at one-third and will return to the full rate in April 2022, although it is possible that a new system will be introduced then.<\/p>\n\n\n\n

The furlough scheme is being extended once again but only until the end of September. Staff who are on furlough will still have 80% of their wages paid by the Government but, as previously, the employer\u2019s contribution will increase; this time to 10% for July and to 20% for August and September. We can hope that the majority of pub staff will have been recalled by then, although redundancies cannot be ruled out.<\/p>\n\n\n\n

Overall, the financial situation for privately owned and tenanted pubs is going to be very tight, especially if they have loans to repay. The large pub owning companies will benefit from some changes to Corporation Tax. The increase to 25% from 2023 will only apply to profits of more than \u00a3250,000. Anything below that will still be taxed at 19%. There are also some generous allowances for investments.<\/p>\n\n\n\n

CAMRA\u2019s National Chairman, Nik Antona, commented, \u201cFreezing alcohol duty is obviously better than a rise. However, CAMRA had hoped to see the Chancellor announce a cut in duty on beer served on tap in pubs and social clubs to benefit consumers and help the great British pub recover and thrive in the difficult months and years ahead by being able to compete with supermarket alcohol. The Government\u2019s commitment to review alcohol duties in the coming months is welcome. CAMRA will continue to call for a lower rate of duty for beer served in pubs; an option available to the Government now we have left the European Union. Reducing tax on beer served in pubs and social clubs would encourage responsible drinking in a supervised, community setting, as well as boosting jobs and local economies, helping consumers and benefiting pubs and licensees. Cutting VAT as pubs begin to reopen, and reducing it until April next year, means they can now start benefiting from that cut but CAMRA believes this VAT cut should be extended to alcohol so that traditional locals that don\u2019t serve food can benefit too. The extension of furlough until September and new grants of up to \u00a318,000 are very welcome. However, pubs are unlikely to be able to fully reopen at pre-COVID trading levels due to outside space and then table service only indoors restrictions. The beer and pubs sector will need further support over the coming months, over and above new loans, to help them get back on their feet until there is a full and proper reopening and they can trade at full capacity. Extending the business rates holiday until the end of June will help keep the wolves from the door for many English pubs, with the two-thirds reduction for the rest of the financial year a welcome step. However, given how tough it will be for many pubs we believe the 100% cut in business rates needs to be extended for a full twelve months, as has already happened in Scotland<\/em>.\u201d<\/p>\n\n\n\n

The Government also announced the creation of the Community Ownership Fund. See here <\/a>for details.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Restart grants<\/strong><\/p>\n\n\n\n

The new grants that Nik mentions are specifically for businesses that have been forced to close during lockdown. Non-essential shops can claim up to \u00a36,000 but pubs and restaurants are entitled to up to \u00a318,000 to compensate for their later reopening. It might also help with the cost of perishable stock that had to be thrown away when the third lockdown was introduced. The grants will be funded by the Government but administered by local councils, starting in April. There have been complaints about the payment of locally administered grants being delayed. On 3 March, the representative body for the London borough councils, London Councils, commented, \u2018Unfortunately, boroughs face a number of barriers to getting grants out, which we would like Government to help us address. These include the complexity of the grants system \u2013 there have been 12 different grants announced since November 2020 with different criteria \u2013 and delays in publishing essential guidance on allocating funding\u2019<\/em>. There will also be a new round of recovery loans starting from 6 April. These are operated by the major high street banks and are intended for larger businesses. They range from \u00a325,000 to \u00a310 million and are guaranteed up to 80% by the Government.<\/p>\n\n\n\n

Time to pay<\/strong><\/p>\n\n\n\n

On 5 February, the Chancellor of the Exchequer announced a change in the terms of the Bounce Back Loan Scheme under which some 1.4 million small firms had borrowed a total of \u00a345 billion. The maximum loan was \u00a350,000 and was free of interest for the first year. The BBC reported that the repayment period could now be extended from six to ten years and payment holidays would be permitted. The Chancellor said that he wanted to give firms a \u2018breathing space to get back on their feet\u2019. The National Audit Office had expressed concern that up to two thirds of the loans might not be repaid because of company failures.<\/p>\n\n\n\n

Alcohol Duty<\/strong><\/p>\n\n\n\n

Prior to the Budget, 68 Conservative MPs wrote to the Chancellor of the Exchequer asking him to cut beer duty. One of them was quoted in the Morning Advertiser<\/em> as saying, \u201cThe best way for (pubs) to build back better after this crisis is to get people back into pubs and the best encouragement for publicans and the public is to see real action on beer duty<\/em>.\u201d But is this correct? Does cutting beer duty actually help pubs? It is breweries that pay beer duty, not pubs, and it is part of the buy-in price that pubs pay for their beer. That is unlikely to be reduced in these circumstances. <\/p>\n\n\n\n

Back in October 2018, Geoff Strawbridge, CAMRA\u2019s Regional Director for Greater London, contributed the following article. The logic has stood the test of time, although the amounts involved are out of date. Some of you may have seen this recently on Facebook (although neither Geoff nor London Drinker were asked or credited).<\/p>\n\n\n\n

Who Takes How Much From the Price that I Pay For My Pint \u2013 A Worked Example<\/strong><\/p>\n\n\n\n

For a firkin of my favourite session bitter, the price paid to the brewer by the pub owning business (POB) via the SIBA Beerflex scheme is \u00a357.87 plus VAT. That \u00a357.87 includes \u00a316.50 beer duty at the 50% rate applicable under Small Brewers\u2019 Duty Relief. The price paid to the POB by the tied house where I drink that beer is \u00a3120.52 plus VAT; so the POB takes a \u2018wet rent\u2019 on that firkin of \u00a362.65. This particular session bitter lasts to well down the cask, so let\u2019s assume for the purposes of this calculation that the pub can get 70 pints out of each firkin (very conservative, I know); so the POB profit per pint is around 90p.<\/p>\n\n\n\n

I pay \u00a34.40 in that tied house for that pint (I read that \u00a34.44 is the London average price of a pint these days); so 20.3% of what I pay in this instance goes to the POB, 16.7% goes to the Government in VAT, 13.4% goes to the brewer and just 5.4% goes (via the brewer but not included in that 13.4%) to the Government in beer duty. The remaining 44.2% has to cover the dry rent paid to the POB, the business rates, staff wages, maintenance and an income for the publican which is likely to be well below the minimum living wage.<\/p>\n\n\n\n

And of course beer duty has no less impact \u2013 actually proportionately more! \u2013 on the price of discounted beer in supermarkets.<\/p>\n\n\n\n

Why not do the same sums for your favourite beer in your pub?<\/p>\n\n\n\n

Geoff Strawbridge<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

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