Alistair Darling’s last budget before the election took a widely predicted swipe at cider drinkers. This afternoon he announced plans to raise the excise duty on cider by 10% over inflation, singling out our region’s choice for special mistreatment. Taxes on beer, wine and spirits will rise by just 2% over inflation, so Labour’s champagne socialists will be raising their glasses to the Chancellor tonight.
We already have some of the highest rates of duty in the world and the latest increase is bound to cost Wessex jobs. A 47% increase in cider duty in 1984 resulted in the loss of more than 500 jobs industry-wide and duty increases remain a threat to the success of cider sales today. The cider industry, as one of the few to have achieved growth through the recent recession, is a true success story. Today’s duty increase will undo much of this good work and the impact of a significant price increase to the consumer will probably also be counterproductive in raising revenue for the Government. Currently cider and perry contributes around £370 million annually, or more than £1 million a day, in excise duty and VAT to the UK Exchequer.
Duty on a pint of cider has been traditionally low – around 18p on average compared to 46p for a pint of beer – despite cider’s popularity with problem drinkers and the young. There has been intense lobbying to raise its price. Yet alcohol consumption is falling at the fastest rate for six decades, with pub closures the most visible sign – running at 52 a week. In truth, there are no problem drinks, only problem drinkers, and making everyone else drink less is not the solution.
Cider is much more expensive to produce than other drinks and it helps underpin the economy in many rural areas. Raising the tax on cider will make beer more competitive, to the advantage of the big foreign breweries. David Sheppy, of Sheppy’s Cider, from Bradford-on-Tone, near Taunton, said: “We are not pleased. A 10% increase is quite devastating news. A lot of money has been put into investment in the cider industry, and we don’t now want to see that investment wasted.”
John Sheaves, Chief Executive of the food and drink association Taste of the West, described the proposal as “a sledgehammer being used to crack a nut. Because of the nature of the industry, we’re not talking about big companies, we’re talking about small producers who often employ very few people and have fixed overheads and small avenues by which they can increase prices.
“To slap a tax on sales would impact on those businesses’ profitability and ability to thrive. The Government is meant to be trying to encourage home-grown production and sustainable food and drink production as well as trying to encourage rural economic development. That doesn’t square with this proposal.”
Simon Russell, spokesman for the National Association of Cider Makers, said: “This is entirely the wrong message. It puts at risk the very businesses that are doing so much to bring investment to the rural economy and to use the countryside in a positive, agricultural way including helping with carbon emissions.”
It has to be said that not all ‘cider’ sold in the UK is truly worthy of the name. Some of it is just cheap strong alcohol which is called ‘cider’ for tax purposes. It could be made out of corn syrup or anything, with flavouring and saccharin added. A more discriminating approach to definitions could help Wessex a lot.
Tackling ‘alcopops’ by taxing cider will not deter those with disposable income who are determined to drink. They will find substitutes or else pay more. Or steal more, in some cases. Chris Coles, managing director of Topsham-based Green Valley Cyder, stated: “The supermarkets are frequently discounting lagers which you can buy for 25p a can – that’s almost criminal, it’s encouraging people to drink without encouraging them to make a sensible choice.”
Instead of punishing the responsible and irresponsible alike, the Government should enforce more firmly the existing laws on sales and on-street behaviour, adopting a policy of zero tolerance towards those who go beyond their limits.