Keg sizes, rates and the bits that Boris and Rishi missed
WELL that was all very exciting, wasn’t it? The Budget was announced on Wednesday by Chancellor of the Exchequer, Rishi Sunak, in the House of Commons and to cement his position as a man of the people, Rishi made a surprise visit to Bury the following day.
Granted, he thought he was in Burnley, but you know what it’s like when you’re abroad. Easy to get places mixed up.
This budget is not a good one for the smaller producer
If you’re looking for a vignette to illustrate the effects of this year’s budget on hospitality, consider Wednesday's Boris Johnson and Rishi Sunak photo op at London brewery FourPure. The "craft" brewery, which was sold to an Australian food and drink corporation, Lion, in 2018, was the perfect place for Sunak (teetotal) and Johnson to brandish barrels of beer and pints aloft.
Except, said 30L barrels of beer, the most common size for craft breweries, wouldn’t qualify for the tax relief under their own proposals. What’s that saying about organising things in breweries?
He should Burnley his head in shame… pic.twitter.com/6m3lolJHUQ
— Manchester Confidential (@mcrconfidential) October 28, 2021
Away from the fun and games of politics, back in the North West, the hospitality sector watched on as announcements (or lack thereof) on alcohol duty, business rates and VAT played out.
In the aftermath of the pandemic and Brexit, businesses were understandably keen to see how the budget might affect them. With time to digest the announcement, we caught up with figures from across the hospitality industry to get their thoughts.
Aaron Lee, Chef owner at South Manny Flavaz in Manchester
"I've no idea where he [Rishi Sunak] got the 'jobs up, debt down' points. Our debt has never been worse and neither has our staff recruitment or retention, this high-skilled economy bollocks. I'm hiring chefs straight out of college and most have been e-learning for the last 12 months - I may as well get them straight out of high school."
"Financially, increasing the living wage I think is a brilliant idea, but does Rishi really think this April is the right time to do it? Businesses are behind on VAT, struggling to keep up with bounce-back loan repayments and landlords are applying pressure again. Don’t forget the energy surge."
"From a young employee’s perspective, this is great. From a young entrepreneur’s perspective this is an absolute disaster having to pay just under £10 per hour for 80% of our workforce. Do we increase our price points to generate the income? He failed to mention how we keep up with this inflation. It's inflation on all fronts in such a short space of time."
Steve Dunkley, Owner of Beer Nouveau in Manchester
"One of the things that make Manchester possibly the best city in the world to go out drinking is the amazing variety we have here. No matter what sort of drink you want, or what sort of venue you want, we have a lot of them. And that’s because we have small independent brewers, cider makers, distillers and bars all sitting happily amongst the bigger producers and venues."
"But this budget is not a good one for the smaller producer. The promised ‘draught relief’ will only work out at about 3 pence per pint for the smaller breweries, and 6 pence per pint for the larger producers. This isn’t a saving that will be passed on to the bars, let alone the customers, meaning that the likes of Heineken will save millions of pounds a year, but the independents won’t even notice a difference. And it’s only on draught beer. Manchester has some amazing independent bottle shops and cafes where you can sit down for a natter over a good range of bottled beers, and these miss out completely."
"And then there’s the reformation of the alcohol duty system. It’s a mess."
"By trying to merge it all into one, they’ve gone off with vagaries. They reference that beer, cider and made wine [cider with fruit] will now have a Small Producers Relief akin to the Small Brewers Relief, but they’re changing the Small Brewers Relief next year to be something else. Plus the maximum limits of what you can produce as a small brewer, cidery, or made wine producer are all different. Yet, they’re now combining the output for those folks that do produce more than one type of alcohol."
Paul Askew, Chef owner at The Art School and Barnacle in Liverpool
“Business rates at 50% for another year, you’ve got to welcome that. My heart goes out to the publicans and the bar owners because 5% VAT on food doesn’t help them, it’s still 20% on booze. So they’ve dropped the duty, which makes it sound like ‘oh this is amazing’, but you’re still talking about 25p a drink - they needed to drop the VAT for that as well.”
“English sparkling wine is a great result because they were more expensive than champagne, even though they come from this country.”
“There’s a few big ticket items that they didn’t tackle. They didn’t say anything about the VAT and what we needed was certainty. We needed to know what the thinking is whereas now people will stop investing, they’ll be cautious because if [the government] is not saying anything, that tends to imply they’re going to change it [VAT] back to 20%. If they change it back, I’ll tell you now, I know some people that will just say - I’m not going back.”
Out of the current keg stock at @CafeBeermoth only this one would benefit by a 5% cut in duty after today's budget. pic.twitter.com/mk16Nt3QZo
— Beermoth (@thebeermoth) October 27, 2021
Scott Davies, Director at Beermoth in Manchester
"Obviously this government is awful and a lot of the budget was sticking plasters on things they've broken over the last decade. I'd be surprised if the beer duty cut is passed on to pubs, let alone consumers. A reduction in VAT would have been the way to achieve that - if it was ever the goal."
"The 40 litre and above rule is odd. Most decent beers (there are notable exceptions) are packaged in 20 or 30-litre kegs. There's an additional high strength duty rate for any beers over 7.4% ABV. So generally, the more exciting stuff will not qualify for the cut. I presume they picked 40 litres as the cut off because the majority of cask ales are packaged into 9-gallon (just under 41-litre) containers. Not sure why they’d want to penalise smaller, progressive brewers though."
"The 50% business rate relief is good news. It's necessary, particularly in the city centre with high rates and most people still working away from the office."