This week, Philip Hammond pulled the same stunt, which led to widespread confusion as to what the duty implications actually were. One well-known brewer, who will not be named, even said on Twitter that they didn’t think there had been any changes. The situation was so bad that the British Beer and Pub Association felt compelled to issue a statement clarifying the position.
Even the official government announcement was distinctly disingenuous, saying “This measure increases the duty rates on alcohol manufactured in, or imported into, the UK by reference to the retail prices index (RPI).” Anyone reading this would assume that duties had been increased in line with RPI, but in fact the term “by reference to” meant that the dreaded duty escalator had returned, with rates going up by RPI plus 2%.
This means that the main rate of beer duty has increased from £18.37 per hectolitre per % of alcohol to £19.08, a rise of 3.86%. A pint of 4% beer will now incur duty plus VAT on duty of 52p, a rise of 2p over the previous level. Inevitably, once pubs have applied standard mark-ups, this will translate into 5p at the bar, and often 10p given the way many prices are now rounded up.
It’s easy to dismiss such rises are trivial and say people will take them in their stride. But every price increase is a step too far for someone who is already at the limits of their budget. And, over time, successive above-inflation increases in duty will make alcoholic drinks significantly more expensive in real terms and reduce the demand for them. Although obviously it wasn’t the sole factor, it is noticeable how the rate of decline in the pub trade in the three years since the escalator was shelved in 2014 has been considerably less than in the preceding years.
It would have been understandable, if regrettable, if the government had returned to raising duties each year in line with inflation. But it has been made clear that the duty escalator was never scrapped, merely suspended, and is now back with a vengeance.
Sadly, all the hard work that CAMRA and drinks trade bodies devoted to campaigning against it and pointing out its negative effect on one of Britain’s biggest business sectors has been thrown back in their faces. The process is going to have to be restarted, and this time it must be made clear that the objective is to drive a stake through the escalator’s heart, not just to put it into suspended animation.