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Small Brewers’ Relief – why tinker with it now?

Image: Nick Kane, Unsplash.

This week, the Government announced its intention to reform the small brewery relief scheme (SBR) in ways which will significantly disadvantage some smaller breweries.

The news of this step was dumped alongside a bunch of other fiscal policy on the eve of parliamentary recess. It came less than a fortnight after a ‘mini-Budget’ at which, under a regime less inclined to chaos and knee-jerk responses, you might have expected a proper announcement, debate and supporting paperwork.

The history of the policy is interesting. It wasn’t introduced with the lofty intention of boosting the number of breweries but to provide then Chancellor Gordon Brown with something positive to announce in the spirit of ‘Have a pint on me!’ It wasn’t brilliantly designed or carefully thought through – its success has been an accident.

But changing it now will destabilise the industry or, rather, cause turbulence on top of turbulence. It’s likely that dreams will come crashing down and businesses will fold. (What does that feel like? Here’s some new evidence from a much-missed voice.)

People are understandably concerned – even furious and upset in some cases, and not without justification.

We believe the breweries lobbying for it have made a strategic error; and we, like others, might be less inclined to buy their beer or speak positively of them as a result.

And we don’t really buy the ‘Poor us – we’re being undercut by these upstarts’ argument. It sticks in the craw somewhat to see breweries who own hundreds of tied pubs, to which they often sell their beer at above the market price, complaining about distortions in the market.

It’s also a bit confusing as to which breweries support this policy. Several breweries have already distanced themselves from the initial pressure group, suggesting that what might have been portrayed to the government as a significant industry grouping is more like a handful of very specific interests. Beer Nouveau is keeping an updated list to help consumers identify who exactly has been pushing for this.

We’ll be using this list as a reference point, although we’ll stop short of an outright boycott of the supporters of this policy, for the following reasons.

  • This behaviour isn’t surprising. We’ve never thought of, say, St Austell as anything other than a ruthlessly commercial and politically conservative.
  • It might be unappealing, selfish and hard-nosed but it isn’t immoral or illegal. Breweries are businesses and this is how businesses behave.
  • We believe their grabbiness is borne out of anxiety. One of the great flaws in the system is that even the biggest, most successful businesses are only ever one short step from failure. And family breweries especially have proven vulnerable in recent decades.
  • Some of these breweries are culturally important. It’s in nobody’s interest to see Taylor’s or Harvey’s, among the last of their kind, go out of business.

And yes, we happen to really enjoy products from some of these breweries.

But maybe, when we’re thinking about where to go this weekend, we’ll be more inclined to go somewhere that supports the hard efforts of smaller breweries to compete in these difficult times.

What we might also do is write to our local MP – a calm, personalised, heartfelt letter explaining why this policy causes us concern. (If you send copy-and-paste letters they tend to get categorised as part of a campaign and are treated differently in the system.)

And we hope industry bodies – or perhaps newly formed coalitions of affected breweries – will make their case persuasively to the Government.

It would also be good if the larger breweries who have pushed for this think long and hard about what they’re doing and what sort of message this sends out to consumers.

Despite the tone of the announcement, this is still a policy under consultation. It’s not too late to turn this around, especially with a government so prone to changing its mind in pursuit of short-term applause.

Further reading

6 replies on “Small Brewers’ Relief – why tinker with it now?”

A very measured response. While I can to some extent understand the upset this has caused , I am also conscious that at the moment all we have is little more than a set of bullet points.

There is no information, for example, on exactly who will be affected and to what extent, how the scheme will operate, how and to what degree it will taper, whether there will be any form of transitional provisions for those caught in the crossfire between 2,100hl and 5,000hl and, not least, what the outcome of the consultation may be.

While this does add another layer of worry and uncertainty at the door of brewers who can well do without it, there are too many unknowns at the moment for me to spit too many feathers.

I knew this was coming. SIBA decided that fighting it was futile and working to minimise the impact the most sensible thing to do. I didn’t agree and I believe too much influence had developed from a few key brewers within SIBA. A big mistake.

I’ve lost touch with the detail, and possibly unable to accurately comment on the current situation other than to say that the rot was setting in three years ago and was a key reason for me to exit the industry.

Thanks for the link!

I would not describe Taylor’s response as ‘weasely’,I believe that it provides an explanation of the current tax system and Taylor’s reasons why it should be reformed. A lot will depend on the details of what is proposed,my personal view is that having substantial tax consequences when production exceeds 5000hl is a disincentive to growth and some reform with a progressive taper is justified. It is significant,perhaps,that many supporters of change,listed in red in the Beer Nouveau list,are businesses which have been established in the last 30 years and which have experienced obstacles to their growth in the past. The real threat to the small brewery industry does not involve taxation but relates to the imposition of quasi ties on outlets by major producers and wholesalers with offers of cellar overhauls and cheap Sky TV. These anti competitive practices deprive breweries of customers and the industry should be more vocal in opposing them.

Some questions. Not necessarily for you guys but for anyone really.

In what other industry are small producers compensated for a lack of economies of scale via a tax break?

In what way is a price a market derived one if one group of producers are able to produce a lower priced commodity beer not on productive efficiency but solely on the basis of a tax break?

Why do those craft producers producing a higher value, higher priced none commodity product into the market need a tax break?

Why should consumers of small batch beer enjoy a product with a lower duty than the regular beer consumer? Consumers of higher value wines or whiskies do not receive a similar tax perk?

How sustainable is any industry if it requires an anomaly in the tax system to survive?

For those annoyed at the amount of low-priced commodity cask beer depressing prices, why support a tax system that creates this?

What argument can be made other than, I like these products and breweries and enjoy this tax perk and wish to continue receiving it?

Tax breaks for smaller scale businesses are common and are used in most countries,for example VAT thresholds and small premises rate relief. Industry specific tax relief is also common such as the exemption from business rates relief for agricultural land. Progressive beer duty,which was to an extent copied from similar schemes used in Germany and elsewhere,is an example of the use of the tax system to assist in sustaining and developing a particular industry which,when the relief was introduced some 20 years ago was presumably believed to be a good policy.
I do not believe that tax relief is the main reason why,if this is indeed the case,the price of cask beer is depressed. In Britain a large and vocal movement,the Campaign for Real Ale,has for many years lobbied to keep the retail price of cask beer low,this has led to a public perception that cask beer should be sold at a cheaper price to other draught beers.

Well, I’ve certainly drank my last Beaverton product, and probably last Proper Job, more sadly. Bullies throwing their economic weight about are bad enough but hypocritical ladder pullers are fit only for censure.

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