Chancellor’s measures a welcome ‘first step’

Craft Beer

Trade organisations have welcomed the financial measures announced by UK Chancellor Rishi Sunak to aid the nation’s hospitality industry… but say it is only a first step on a long road to recovery from the coronavirus crisis.

The British Beer & Pub Association (BBPA), the leading trade association representing brewers and pubs, said it was a positive package of support but highlighted further measures would be required to get independent craft breweries and thousands of community pubs, where food is not a focus, back on their feet.

The chancellor announced a cut to 5% on VAT for accommodation and food in hospitality, also announcing an “eat out to help out” scheme to run during August, which would only apply to food and non-alcoholic drinks.

The BBPA said the sector-specific VAT cut would provide a huge boost for pubs serving food and offering accommodation and would help compensate for an expected summer of reduced sales and revenue compared to before lockdown.

Meanwhile James Calder, chief executive of the Society of Independent Brewers (SIBA), felt the announcements were a mixed bag, with the job retention bonus and kickstart scheme for young people being positive steps but the lack of incentives for 'wet-led' community pubs and the nation’s 2,000 breweries being disappointing.

“The job retention bonus and kickstart scheme will help beer, brewing and pubs given we employ a disproportionate number of young people,” Calder said. “The temporary VAT cut to 5% and ‘eat out to help out’ scheme will help encourage people back into the pub. But we’re very disappointed that beer, the UK’s national drink has been excluded from the VAT cut and the eating out scheme. Today’s announcements do nothing to directly help small, ‘wet led’ community pubs and independent craft breweries.”

But BBPA chief executive Emma McClarkin felt the chancellor had clearly communicated pubs and hospitality were safe and open for business.

“The positive measures announced today are a welcome first step on what we believe will be a long road to full recovery for our sector,” she said. “These initiatives, which we have been calling for, will be huge for pubs that serve food and offer accommodation, and will also help compensate for an expected long period of reduced sales and revenue for pubs.

“The ‘eat out to help out’ scheme, taking place in August, will also help stimulate visits to thousands of pubs that serve great food. It will help show to consumers that our pubs are back open for business.

“Of course, for those pubs that do serve significant amounts of food or offer rooms to stay in, the cut to VAT for these to 5% will be a huge boost. Whilst the measures announced today will help food-led pubs, those who just serve beer may feel they are left wanting.”

Under the ‘eat out to help out’ scheme, government will cover 50% of the cost of food in hospitality up to £10 per person per visit, but for pubs where revenue is more drinks led, the announcement provides little help.

The trade association also welcomed the job retention bonus, stating it hoped it would help the sector bring back as many of its furloughed staff as possible.

“The job retention bonus will help our sector to bring back as many of its furloughed staff as possible – with 90% of pub staff furloughed, it should help protect many jobs,” McClarkin said. “Our pubs directly employ 600,000 people – 43% of which are under 25, making them a vital source of employment for young people in communities across the UK. We therefore welcome the ‘kickstart job scheme’ announced today for young people on Universal Credit.

“The pub and brewing sector has huge potential to create thousands of new jobs and employ more people, but to do this it needs to be thriving, not just surviving. This will require more support in the medium term directed at all pubs and brewers so they can help lead with the economic recovery.”

But SIBA’s Calder was disappointed to see announcements on reform of small breweries relief and a wider review of alcohol duties had been delayed again.

“Treasury have confirmed with us that the long-awaited announcements on small breweries relief reform and the wider review of alcohol duties have been delayed again, until such a time that the chancellor and his team can examine the issues in greater detail,” he said. “Given the covid earthquake that has hit the brewing industry, we need a tax system that does what the chancellor set out to do for the whole economy: to protect jobs and to enable us to bounce back.

“The only way that can happen is to reduce the overall tax burden, protect the relief for the smallest breweries and incentivise growth. We look forward to working with the chancellor on the future of independent brewing in Britain.”

Details Of Chancellor’s Announcement

Job Retention Bonus: A one-off payment of £1,000 to UK employers for every furlough employee who remains employed to January 2021. Employers must earn above the lower earnings limit (£520 per month) on average.

Kickstart Scheme: A £2 billion fund to create hundreds of six-month work placements for 16-24 year olds on Universal Credit. Funding will cover 100% of the national minimum wage for 25 hours a week, plus NI contributions.

Traineeships: An additional £111m for traineeships in England to fund work placements and training for 16 to 24 year olds. The government will fund this through a £1,000 grant to businesses.

Apprenticeship: New payment of £2,000 to employers in England for each new apprentice under 25 hired and £1,500 for those over 25.

Eat Out To Help Out: Every diner will receive a 50% discount up to £10 per head on their meal at participating restaurants, cafes and pubs. It can be used unlimited times Monday-Wednesday on any eat-in meal (including on non-alcoholic drinks) for August.

Temporary VAT Cut: From 15 July to 12 January, VAT will be reduced to 5% for supplies of food and non-alcoholic drinks from restaurants pubs bars and cafes. The cut will also apply to accommodation and admission to attractions.