Company Statement: Small Brewer Relief (SBR) Consultation & Small Brewers Duty Reform Coalition (SBDRC)
Monday 27 July 2020
Following indicative conclusions announced by the Treasury last week following their SBR Review, and ahead of their consultation in the Autumn, we have been called upon to outline our position following the latest announcements given historical associations with the SBDRC.
Due to changes internally, we have not played an active role in the SBDRC over the past twelve months, but we continue to support their overarching ambitions to reform the SBR. The organisation has campaigned for a more sensible duty rate curve, not for the lowering of the threshold. Without the further detail we all require from the Treasury, it is impossible for us to definitively take a view on the announcement, so we join many others in requesting greater clarity urgently.
Since 2002, SBR has been vital in facilitating new entrants into the brewing industry and creating one of the most vibrant and diverse national beer scenes in the world. We passionately support this element and will always look to protect this. However, it has also created artificial barriers to growth, with many brewers purposefully remaining a few hectolitres under the 5,000 HL threshold to protect their profitability. Truman’s has sat on the “cliff” of the curve for several years so can testify first-hand that the existing SBR legislation - which is inadvertently punitive to brewers trying to grow - is not fit for purpose and that this review was well overdue. All trade bodies agree this.
Our position on the proposed changes to SBR announced last week is that we support any adjustment which will enable breweries to grow with a smoother duty rate curve that is in line with the rate economies of scales can be realised.
The Treasury have already advised any changes need to be fiscally neutral, which makes changing any fiscal system without negatively impacting some parties challenging. However, we currently do not believe that the system needs adjusting for breweries with output less than 5,000 HL. We will await the further detail from the Treasury to assess how much this will affect brewers with annual production of 2,100 – 5,000 HL, but by creating a fiscal environment which supports growth, we would expect to see a larger proportion of brewers paying higher duty rates on larger volumes and that this would more than compensate for the loss of benefit from higher revenues to the Treasury from their proposed changes to this lower band of output.
If there is clear evidence that this change is required, which for the avoidance of doubt we have not yet seen, we would call for this to be over a transitional period that enables affected brewers to adjust without any negative impact to protect these brewers and the jobs which they create. We also support the request to carve out export volume and the proposals to move to a calculation of SBR based on Moving Annual Throughput (MAT). We are also fully supportive of a reduction on overall beer duty in the upcoming duty review which our industry needs more than ever at times like these.
Whilst we understand that this is an emotive subject as it has a tangible impact on businesses and livelihoods, one of the greatest assets of our industry is that it is a broad church welcoming everyone of all sizes. To this end, we would call for a de-escalation of the hostile rhetoric seen over the course of the past week and urge all sides, of every shape and size, to collaborate in a civil debate to ensure that we have a positive collective voice in to Government.