In last year's Budget, George Osborne delivered a second consecutive cut in beer duty - something no other Chancellor had managed in 150 years. Following the first reduction in 2013, this decision was a major boost for Britain's beer drinkers and the wider economy. It increased sales, encouraged new investment and secured thousands of vital jobs all over the country. As the 2015 Budget approaches, the Chancellor has the opportunity to score a historic hat-trick of duty cuts - and for consumers, industry and the labour market it is critical he doesn't miss.
Due to the Chancellor's decisions in 2013 and 2014, the UK beer market is back in growth for the first time in over a decade; 7 in 10 drinks containing alcohol bought in pubs are now beer. According to a recent Oxford Economics report commissioned by the British Beer and Pub Association, this translates to an extra 500 million pints of beer being sold - meaning an extra 16,000 jobs have been created. This analysis is also supported by the latest industry and HMRC data on sales, consumption and duty revenues, which all point to a very significant boost to the market and to jobs from the successive cuts.
The benefits of reducing beer duty have not been limited to the brewing and pub industry. Increased confidence in the sector has helped the wider supply chain and economy. Every job in brewing generates 21 jobs in pubs, agriculture, the supply chain, and retail. And evidence from a BBPA member survey shows nearly 90 per cent of respondents intend to increase their investment in the UK following the Chancellor's decisions. Examples include working with malting barley and hop suppliers, enhancing their brewery operations, and upgrading existing estates with substantial refurbishments.
The gains in jobs and for the economy over the last two years are evident - but there is no reason why there shouldn't be even more. Beer and pubs contribute £22bn to UK GDP - but one pound in every three spent in pubs goes to the taxman, with half of brewers' turnover paid in excise duty. If the Chancellor can cut beer duty in this year's Budget, then the industry will be able to provide even more jobs and further drive UK economic growth. But any future tax increase would curtail renewed ambition, damage jobs and inhibit investment in manufacturing and skills.
What's more, British drinkers are not getting a fair deal compared to their counterparts in the rest of the EU. Despite being the second most important brewing nation in Europe, beer duty in the UK remains significantly higher than our European neighbours. In fact, the UK pays 40% of all beer duty in the EU, but consumes only 12% of all beer sold.
This is why AB InBev UK is calling on the Chancellor to grant a third successive cut in beer duty in his final Budget before the election. A sustained period of stability and further action on duty will enable brewing and pubs to thrive in the UK, secure thousands more pub jobs and stimulate further investment, as well as keeping beer prices in pubs affordable for hard working consumers.
Chancellor, please give us something to raise a glass to on the 18th March.