Trouble brewing in orchards as cider exempted from tax relief
Cider makers are furious the Westcountry tipple has been shunned from George Osborne's "a penny off a pint" and plans to scrap automatic tax hikes for beer.
The beer industry and campaign groups have been warning the Government that the beer duty escalator – which has added 2% to the price of a pint since it was introduced by Labour in 2008 – was forcing pubs out of business.
In his Budget, the Chancellor yesterday announced the beer escalator will be scrapped – preventing a 3p rise this year – and went further by cutting beer duty 1p from Sunday evening.
But neither move will apply to cider, which will face inflation-busting tax rises that will see 2p added to a pint of the drink synonymous with the region. There is no exemption for wines and spirits.
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Beer campaigners hailed the measures, claiming the move would save 5,000 pubs and could actually increase the amount of money the Treasury raises by £5 million because fewer pubs go bust.
Cider makers, key to the economy of Devon and Somerset in particular, accused ministers of showing "favouritism" and called for the exemption to be extended.
Brewers, publicans and businessmen in the region hailed the move to scrap the Government's beer duty escalator as a "victory".
John Lawton, owner of the Teignworthy Brewery, in Devon, joined a Whitehall delegation to protest against the measure last month.
Mr Lawton estimates up to "two to three" pubs each week in Devon and Cornwall have been forced to shut, a claim highlighted by the recent closure of Dartmoor's historic Drewe Arms.
Yesterday he said the reverse would help "stem the flow", adding: "It is a victory and gives light at the end of the tunnel for pubs and brewers.
"Everybody around the world wants to copy what we have got in terms of a pub culture – if we lose it or it becomes uneconomic things will never be the same." James Staughton, managing director of Cornwall's St Austell Brewery, said: "This will make George Osborne the toast of Britain's pubs. It will come as a very welcome relief for all those who enjoy a pint and for landlords who have been working so hard to maintain their businesses and retain jobs whilst buffeted by the economic downturn and previous duty increases."
But Andrew Quinlan, founder of Glastonbury, Somerset-based Orchard Pig, said cider makers had been hit by an "awful" harvest last year.
He said: "Cider is being taxed for growth, innovation and job creation. It almost appears that, in theory, beer is being rewarded for the opposite. Again its the beer market that gets the favouritism in a tough market place."
Paul Bartlett, chairman of the National Association of Cider Makers, said he was "disappointed", adding: "Cider makers will recognise the benefit for a hard-pressed pub industry from this move.
"As vibrant pubs have a drinks offer much broader than just beer, the abolition of the escalator for all alcohol would have gone further."
The Treasury said cider duties remain the lowest – and the duty on an average pint of cider is less than half the duty on a pint of beer of similar strength.
Cider makers pointed out this is because of the extra investment and time required to grow orchards and produce apples.