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What’s it going to be, Mr Chancellor? - Nervous wait ahead of beer tax decision

By Burton Mail  |  Posted: March 10, 2014

Burton's MP Andrew Griffiths with Chancellor George Osborne during a visit to Marston's

Burton's MP Andrew Griffiths with Chancellor George Osborne during a visit to Marston's

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IT was a day many in the brewing industry thought they would never see.

Chancellor George Osborne’s historic move to slash 1p off beer duty 12 months ago - the first cut in 54 years - and scrap the loathed beer duty escalator was met with widespread joy from breweries and pubs up and down the country.

Industry experts insist it has not only saved but created thousands of jobs and injected a renewed confidence going forward, but a year on from the momentous announcement, bosses are now anxiously awaiting the next move ahead of next week’s Budget.

Burton’s MP Andrew Griffiths is once again spearheading the campaign, with the fingers of bosses at the town’s brewing giants firmly crossed.

On the one hand, many find it difficult to believe the Government would impose a tax rise given the level of backslapping and celebration that came with the decision only a year ago.

It allowed George Osborne to enjoy a period of support and complimentary noises, something which has been in pretty short supply since becoming Chancellor in 2010.

Is he really going to renege on his pledge to support the industry a mere 12 months on?

But then are those who fear huge savings, the type which is seeing many local authorities losing millions of pounds in funding, could spell danger for hopes of a freeze, let alone an unprecedented second successive cut.

One man hoping that will not be the case is Richard Matthews, regional secretary for the British Beer and Pub Association (BBPA).

He said a tax rise now would only undo the good work achieved during the last 12 months.

Mr Matthews told the Mail: “What we’re asking for this year is more of the same. The removal of the escalator and duty cut secured 10,000 jobs in the industry and has given companies confidence to invest.”

One of those companies is Burton’s very own Marston’s.

Bosses are in no doubt that the duty cut has allowed it to plough money into growing its empire, pointing to the £7.4 million bottling plant which was opened in the town in January.

Managing director Richard Westwood said: “The removal of the beer duty escalator and 1p cut in duty by the Chancellor last year has been a boost at both pub and brewery level and has undoubtedly stimulated growth across the sector.

“At Marston’s this has helped us to invest in our five breweries across the country – with £7.4m alone being invested in packaging facility at the Burton brewery – which has led to more business for suppliers to the sector and new jobs. A freeze on duty this year would see growth and investment continuing in the same vein.”

While the breweries are thriving, many pubs are continuing to struggle.

The Mail reported last week that 28 pubs are still closing their doors every week, with the Campaign for Real Ale insisting the Government still has much more to do.

Bill Ganley, who runs Burton pubs The Grange, in Casey Lane, and the Old Cottage Tavern, in Byrkley Street, and is also a Labour councillor in the town, agrees.

He said: “The freeze in duty has been a help and has been very welcome , but I look at the pubs I run and one of the biggest issues is heating. Gas and electric prices are a massive issue, I can’t run a cold pub. Also, the wholesale cost of products has gone up so much, we have seen a 20 per cent rise in the cost of products.

“I totally back Andrew Griffiths’ campaign, I think it is a wonderful thing but we are being hit by so many other issues.

“My great fear for businesses is that there is going to be a review of business rates and we will see an increase not a decrease. Pubs are paying a fortune in business rates and that needs to be seriously looked at. It’s costing business thousands of pounds a year.

“As welcome as a freeze in beer duty is, it’s a headline grabber, it’s tinkering around the edges. There are many other factors that make a viable pub.”

But the BBPA’s Mr Matthews insists were it not for the cut in duty and the removal of the escalator, the number of pubs closing would be much larger.

He said: “It could have been a lot worse. We have seen the effects of increasing tax over the last few years. Between 2008 and 2013, duty increased by 42 per cent and consumption fell by 21 per cent - 7,000 pubs closed and 58,000 jobs were lost.

“But companies are investing now. Marston’s has gone on record saying it wants to open 25 pubs a year, which is really good news and we just want that to continue.

“We understand the economic situation, but if not another cut, then a freeze would go a long way towards helping the industry.”

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