Brigid Simmonds: Britain's beer deserves a much better deal

HOW we tax different types of drink may not be the most common topic for after-dinner conversation. Yet is does matter, as there is a lot at stake.

With so many billions raised in taxes on alcohol, and with over half a million jobs dependent on the industry, what may seem like esoteric changes to how we tax different types of drinks can have a huge impact –not least on Britain's much-loved pubs, many of which have been struggling to emerge from recession.

With the Government currently reviewing the UK's alcohol duty system, we have the chance to look at this issue afresh. We could achieve real changes that would benefit jobs, pubs, and the wider economy, as the current tax system is discouraging the consumption of beer in favour of stronger drinks – with real costs to the economy

Hide Ad
Hide Ad

Research conducted for us by Oxford Economics shows that around 30,000 jobs could be created if we returned to a tax system that was fairer to beer. Instead, the current UK duty system works against our national drink.

You only have to look at the comparative prices of a unit of alcohol in each type of drink to see this in action. A unit of alcohol in a typical beer costs 42 pence, compared to 37p for vodka, 38p for gin, and 33p for cider.

Other countries take firm steps to correct this imbalance through their alcohol taxation system – yet in Britain, we have allowed this gap to widen in recent years. It is no wonder that younger drinkers are increasingly choosing spirits on a night out or when they drink at home.

Britons now drink seven million fewer pints of beer a day than they did in 1997. In contrast, sales of spirits soared by 29 per cent from 1997 to 2009.

Hide Ad
Hide Ad

Such a major shift within the sector is bound to have a huge impact. Less beer sold in pubs means fewer jobs for the hundreds of thousands of bar staff and publicans who make a living by selling beer – and around 90 per cent of beer consumed in Britain is brewed in Britain. This applies not just to the wonderful range of beers that forms our

brewing heritage, but to our favourite lagers as well.

We asked Oxford Economics to look at the economic impact of moving to a duty system more in line with Ireland, where the duty rates for difference types of drinks increases more significantly with strength.

Beer duty in the UK is now 40 per cent higher than in Ireland, yet we tax every other category of drinks less in comparison.

In Ireland, the tax rate on spirits is almost double that on beer. Ireland's approach is not uncommon – compared with the UK, virtually

Hide Ad
Hide Ad

every other EU country has much higher taxes on spirits than on

beer, recognising the benefits of beer as the favourite low-strength product and its greater costs of production.

In addition to creating 29,500 new jobs, adopting the Irish approach would bring in around 250m each year in extra tax revenues from employment and corporation taxes. With significant numbers of new jobs created, Government benefit payments would also be reduced.

A fairer tax system would mean more business for a wide array of other industries, from the UK farmer growing the barley that is turned into malt for beer, to crisp and snack-makers – hundreds of thousands of

Hide Ad
Hide Ad

jobs depend on brewing and pubs. Buying a British-brewed beer in your local pub is great for employment – and that's without weighing the

huge but simple pleasure of sharing a drink with friends, and keeping open our community pubs.

A vibrant brewing sector is vital to pubs. While total beer sales have struggled in recent times, it is still by far the pubgoer's favourite drink, with 60 per cent of pub drink sales, as opposed to 17 per cent for wine.

This is why the new Government has rightly recognised the link between tax rises on beer and the closure of pubs. With this in mind, I hope Ministers will use their current review of the duty system to give beer a break, protect pubs, and rebalance the tax system in favour of lower-strength drinks.

More tax revenues, more jobs, and thriving pubs. There is potential for a huge success story that could be grasped by the new Government. A

fair deal for beer would create a win-win situation for all.