Budget 2012: the trade reacts

21 March, 2012

Here are some of the trade reactions to the 2012 Budget announcement:

Gavin Partington, interim chief executive of the Wine & Spirit Trade Association, said: “Today’s Budget puts Britain on course for an Olympic record that gives no cause for celebration.

“Consumers and businesses are already paying the price for the excessive duty increases in recent years and today’s news means more price rises are on the way.

“While we recognise the pressure on the public finances, the mounting duty burden on the sector is holding it back from contributing fully to the UK’s economic recovery.”

Mark Hunter, chief Executive of Molson Coors and chairman of the BBPA, said: “There are no winners from the beer duty escalator. 

“Ordinary British drinkers are paying more tax to drink less beer, reducing overall government tax revenues and forcing British brewing into a deeper, duty-fuelled decline.

“The ‘escalator’ has lost all sense of proportion and logic – beer drinkers in Britain already pay a whopping 40% of all European beer tax and yet drink only 13% of the beer – and we are disappointed that the government has chosen not to end this crippling policy.”

The Federation of Wholesale Distributors welcomed the announcement that the government would consult on a number of plans it has been pushing, including duty stamps on beer and a register of licensed wholesalers. 

Chief executive James Bielby said: “Today’s announcement is good news not only for taxpayers who are losing out as criminals evade paying duty on alcohol, but also for legitimate wholesale and retail businesses who are already struggling in a difficult economic environment. 

“As duty continues to rise, the illicit market will become even more attractive to criminals, and that’s why FWD has pushed hard over the past 18 months for this consultation. We are delighted that the government has heard the message that it has to take steps to prevent loss if it intends to increase duty.”

Oddbins managing director Ayo Akintola said: “The Budget saw a 7.2% increase in excise duty on wines, spirits and beers as the Chancellor proceeded with the tax escalator which automatically increases tax on alcohol by 2% above inflation. It means that in just three years in the UK tax on wine has increased by around a third, such that it now represents 56% of the cost of an average priced bottle of wine. 

“This is simply a continuation of a lazy cash grab on consumers who are hammered for enjoying a glass of wine. The drinks industry is being singled out in a manner that will do nothing to reduce binge-drinking. This continued tax raid will hurt the ‘squeezed middle; and have a disproportionate impact on independent wine merchants that are trying to compete with supermarkets that continue to use alcoholic beverages as a loss leader.”

PLB managing director Peter Darbyshire said: “We all knew there would be increases – it’s just that this time the government wants to be seen as doing it in a friendly, rather than unfriendly way. But there’s no escaping the fact that it’s another blow for consumers who are already very hard pressed with increases in fuel duties among others – yet again, the government gives a tiny bit but takes away a lot more. It’s further evidence that the government is completely ignoring the drinks businesses’ plea for understanding when it comes to duty increases – the Treasury will always agree with you and say your figures are sound, but that it’s Number 11 that decides everything.

“The alcohol strategy pronouncements so far don’t lead us to believe that the government will attempt to deal with the problem intelligently and thoughtfully - it looks like it’ll be a scattergun approach which will take down far more innocent consumers than guilty ones. An effective clampdown on all kinds of fiscal fraud by HMRC would raise revenue more effectively without further penalising the law abiding.”

Mike Benner, chief executive of the Campaign for Real Ale, said: “The fact Britons are forced to pay over 40% of the EU beer tax bill, but consume only 13% of the beer sold in Europe, is remarkable. British beer in a pub is so heavily hit with duty and VAT, the tax man’s whirlwind hikes translate to him guzzling a third of every pint served, a shadow cast over the beer drinker depriving people of an affordable night down their local.

“Such high taxes on beer are totally unsustainable, and therefore CAMRA is launching a consumer fight back in a bid to make the government sees sense. We today urge all beer drinkers to visit camra.org.uk/saveyourpint to get behind this new industry-backed e-petition to help safeguard the future of the beer and pub industry.”

Peter Thomas, chief executive of the BII, said: “The news on the beer escalator remaining unchanged and the extra tax on amusement machines is disappointing.   Personal allowances, VAT on supermarket hot food are welcome but overall the Budget misses the point that small and medium-size businesses are under severe pressure. There is little immediate help to stop struggling pubs from closing.

The other disappointing omission is the lack of attention paid to the million young people out of work.

Further support for apprenticeships, especially in licensed retail, and the opportunity to help employers take these individuals into work with a tax or national insurance holiday were grave errors. We need to keep on reminding politicians that pubs can help and be part of the solution.”

Smokers’ group Forest called the hike in tobacco duty a “smugglers’ charter”. 

Director Simon Clark said: “More and more consumers will turn to the black market or buy their tobacco abroad.

“The elderly, the low-paid and the unemployed will be hit the hardest but this is an attack on all law-abiding smokers who support Britain’s retailers by purchasing their cigarettes at home.

“The only people celebrating this decision will be criminal gangs and tobacco control lobbyists.”

JTI managing director Martin Southgate said: “Following this increase crime bosses will be tapping on their calculators to work out their new profit margins and how to get more customers to buy from their already burgeoning supply chain. Why make it easier for criminals to make money? More focus needs to be given to eradicating this crime and the authorities must use their powers to seize the profits made by these criminals and put them in jail for a length of time that befits their crime.”

Phil Orford, chief executive of the Forum of Private Business, said: “The overall verdict is that there have been some tentative steps in the right direction, and perhaps the beginnings of a road map for the future – but for the next year or two, when many of these policies kick in – what small businesses and the economy need are confident strides forward now. Largely, that has not happened in this Budget.

“We saw nothing on reducing the mounting burden of business rates or fuel duty via cuts and a real stabiliser to regulate prices at the pump. These were omissions – and while the government is working to improve access to funding and bring down banks lending costs by implementing ‘credit easing’ the National Loan Guarantee Scheme, there are concerns that the smallest firms in most need of affordable finance will miss out.

“Further, we called for tax incentives to pave the way for alternative lenders to compete more effectively in finance markets dominated by the big banks, but there was nothing on this in the Budget.

“Reducing the top income tax rate to stimulate entrepreneurship and continuing to cut corporation tax are much-needed measures and we also welcome the concept of merging income tax and National Insurance as a first step in what looks to be long overdue reforms to the tax system for small firms, but the Chancellor could have gone further to give businesses and the economy a bigger boost.”




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