Memorandum from the Brewers' and Licensed
Retailers' Association of Scotland (BLRAS)
The BLRAS is a trade association made up of
a mix of both brewing and brewery owned retail members representing
the industry in Scotland.
As Brewers we brew, package and distribute our
products to every licensed premise in Scotland, ie c 20,000 outlets.
We are also major financial providers to pubs, hotels and clubs
the length and breadth of the country.
As Retailers we own and manage many of Scotland's
major leading edge pub sites.
Members: Full members are made up of companies
who carry out their trade in Scotland. They are made up of both
Brewers and Retailers. Included are Scottish and Newcastle Plc
through Scottish Brewers and Scottish and Newcastle Retail, Bass
with Tennent Caledonian Breweries and their retail arm Bass Leisure,
Whitbread with Whitbread Beer Co and Whitbread Inns, Carlsberg
Tetley Scotland, Belhaven Brewing Company, McClay Group Plc, Caledonian
Brewing Company Limited, Guinness Brewing and Broughton Ales.
1.2 BLRAS AIMS
Our main aims are to continue to be a major
contributor to the economic and social well-being of Scotland
These aims are underpinned with our primary
objectives, which are as follows:
(1) To negotiate, liaise with and ascertain
the view of government departments and other national and international
bodies, and to co-operate with other bodies at all levels of commercial,
technical and professional competence whose objectives and purposes
may be related to those of the Association.
(2) To foster co-operation between its members
on matters pertaining to the brewing industry and licensed trade
(3) To promote understanding between all
sections of the Wholesale and Retail Licensed Trade of Scotland.
(4) To co-operate with the Brewers and Licensed
Retailers Association (the BLRA) and others in the general interest
of brewers and licensed retailers.
There are over 17,000 Licences in Scotland,
which fall under local licensing board control. (See detail under
separate attachment "Beer and Pubs in Scotland").
It is important to understand that whilst the
structure is changing with a build up of more multiple pub owners
some 65 per cent of the pub sector is independently owned and
represents the small independent trader. Parliamentary changes
can be potentially damaging to this sector.
The sector including pubs, hotels and clubs
in Scotland is a massively important employer. It is estimated
some 127,000 people are employed which is ahead of the financial,
agriculture and construction sectors. Pubs and hotels are of course
a vital part of the tourist economy in Scotland.
Beer brewed in Scotland raises more than £250
million in beer duty and £200 million in VAT every year.
Scotland's pubs and other retail outlets turnover
more than £1.2 billion per year.
Scotland's pub operators are investing more
than £125 million a year on improving amenities for customers.
New pub developments are a rich source of additional employment.
Pub operators pay £11 million on business
Transport costs through fuel, road tax, etc
cost some £5.1 million.
The industry is a major trainer and supporter
of lifelong learning schemes. The industry supports:
Scottish Vocational Qualifications.
Graduate Training Schemes.
Scottish Licensee Certificate.
Sponsored professional qualifications.
2.6 BEER EXPORTS
Figures for Scottish beer exports are not available
centrally: statistics are collated on a UK-wide basis as follows:
British beer exports have quadrupled over the
last 10 years to 2,352,800 barrels in 1998, at a value of £241
million. Every day more than 1.8 million pints of British beers
are consumed in overseas markets. One in every 15 pints brewed
in the UK is exported. British beer is exported to over 90 countries:
in 1998, 1,205,600 barrels of beer were exported to the European
Union, while the United States, the UK's biggest single market,
imported 881,500 barrels, equivalent to 2 per cent of the UK's
The national trade association, the Brewers
and Licensed Retailers Association, has set up "British Beer
Exports" to raise awareness of British beer exports and build
on the growing success of this sector of the beer market.
N.B. Attached separately is our pocket guide
booklet to Beer and Pubs in Scotland
expanding on these areas and including other key information on
the sector in Scotland. We trust you find this of use.
Parliamentary issues affecting our industry
We have reserved our comments in this section
to reserved issues and focused on only a few of the areas we feel
are most current and relevant, such as taxation. We are of course
working with the new Scottish Parliament on devolved issues such
as licensing, ratings, transport, law and order, etc.
An estimated 1.5 million pints of beer are brought
to the UK from across the Channel every day and HM Customs and
Excise estimate that around 75 per cent of this is destined for
illegal resale, ie smuggled. The duty on a pint of beer in the
UK is approximately 32 pence, compared to 4 pence a pint in Francethis
represents a direct economic incentive for personal imports, smuggling
and fraud. The cross-Channel trade in beer has trebled since the
UK joined the Single Market and continues to grow, despite tougher
penalties and the deployment of more front-line Customs Officers.
On 30 December 1999, the BLRA, our national
body, published estimates showing that there has been an 11.9
per cent increase in the number of vans carrying smuggled beer
across the Channel from Calais. The problem is a national one,
and not confined to SE England. There is plenty of evidence that
bootlegged beer is widely sold in Scottish cities and towns.
High duty rates threaten pubs, clubs, off-licences
and convenience stores, creating unemployment rather than new
High duty rates have serious social consequences.
The Excise Alliance (a joint initiative between Customs and Excise
and the trade) has exposed evidence of wide scale criminality
particularly associated with the "van trade" in bootlegged
beer. For example, bootleggers sell to children and undermine
the liquor licensing system for controlling sales of alcohol.
Small shopkeepers are intimidated to stock bootlegged alcohol,
often leading to "protection" violence and undermining
respect for the law.
High duty rates hurt the rural economy. Not
only farmers who grow the raw materials for beer, but country
pubs which are a prime source of village employment, as well as
centres for the local community. A community village pub often
depends heavily on beer sales for its profitability and cannot
remain viable in competition with cheap personal imports and bootlegged
beer. A village pub which closes is unlikely to be reopened.
At this stage, it is too early to judge the
consequences of the removal of duty-free allowances that took
effect from 1 July 1999. However, the industry has concerns that,
once there is a wider public understanding that there is an opportunity
to bring back unlimited quantities of beer (subject to indicative
limits) there will be a green light given to even greater volumes
of beer coming across the Channel. Ferry operators will wish to
promote the sale of French duty-paid products to replace the loss
of duty-free sales.
Whilst the industry accepts that alcohol duties
have an important role to play in financing public services, there
is a compelling case for at least a modest cut in duty now. The
industry is far from convinced that penalties and enforcement
alone will deal with the problem of smuggling. The fundamental
problem of the high duty differential between the UK and the continent
needs to be addressed.
On behalf of the whole industry, the Brewers
and Licensed Retailers Association has made representations to
the Chancellor of the Exchequer in advance of his Budget Statement
in the spring. Copies of the industry's Budget Submission can
be made available to the Committee, if desired.
4.1 BEER DUTY
In November 1999, HM Customs and Excise announced
a change in policy with regard to volume filling of large containers.
In order to meet the requirements of weights and measures legislation,
overfill of containers has hitherto been unavoidable and, in recognition
of this, a concession of a 1 per cent overfill tolerance, and
reliance on the defence of due diligence was introduced. HMCE
now say that, in future, duty is to be calculated on the nominal
or actual volume, whichever is the greater. The policy change
would apply to kegs and casks in the first instance, and HMCE
would return to the issue of small packs.
The industry is untied in opposition to this
sudden policy change, which is seen as a duty surcharge. There
will be significant cost implications for the industry, the total
cost of compliance for the whole industry is estimated to be £12-15
million per annum, which includes an additional revenue take of
about £6-12 million per annum. The costs per unit of production
will be higher for small companies, where filling equipment is
less sophisticated and overfill is higher. Sampling rates could
add significantly to operational costs.
The industry is currently in discussions with
HM Customs and Excise on this issue. We believe that, if implemented,
this change in the collection of duty represents a duty surcharge
and effectively establishes a trade barrier for the import of
kegs from continental Europe and third countries.
4.2 CLIMATE CHANGE
The Government intends to introduce the Climate
Change Levy with effect from 1 April 2001. The brewing sector
is subject to the levy at the standard rate but, as an "energy
intensive" sector, will be eligible for an 80 per cent discount
on the rate of levy in exchange for participating in a sector
energy saving agreement.
The industry has negotiated terms for the "main
agreement" with the DETR a sector target of 10 per cent reduction
by 2012. There are significant differences between breweries in
the efficient use of energy and, consequently, individual brewing
sites will have widely differing targets.
The cost of the levy to breweries is calculated
to be £5.8 million and the discount on offer to be £4.8
The energy bill in public houses is about 10
times that in breweries, at around £350 million. However,
as pubs are not production units, they will be subject to the
full climate change levy and can attract no discount.
5.1 DRINK DRIVING
The Government issued a consultation paper "Combating
Drink Driving: the Next Steps" in February 1998, which included
a proposal to reduce the permitted blood alcohol concentration
limit (BAC) for drivers from the current 80mg/100ml to 50mg/10ml.
The industry welcomes and supports many of the
Government's proposals to focus on the hard core of those drinking
above the present blood alcohol limit, but does not believe that
a reduction in the BAC level would make a useful contribution
to road safety. The UK has the best road safety record in Europe,
whilst having a BAC higher than most other European countries.
The key factor is not the limit, but public support and effective
The industry has a record over the past 40 years
of campaigning against drinking and driving and, as part of its
current "Wheelwatch" campaign, has just published a
Good Practice guide for licensees. The industry is also currently
sponsoring research into the behaviour of repeat drink-drive offenders.
The Government's decision on the lowering of
the blood alcohol limit and any other measures to combat drink
driving is still awaited and we understand that any recommendation
is likely to be included in a White Paper on Road Safety expected
5.2 RURAL PUBS
Rural pubs in Scotland, 40 per cent of which
are outwith the Central Belt, face a variety of threats to their
future viability. These establishments often operate fairly much
at the margins of profitability and depend heavily on a sustained
level of beer sales for their continued existence. High beer excise
duty rates encourage personal importation and bootlegging, which
competes directly with the pub's own trade, and the relative smallness
of many rural pubs leaves them no margin for coping with such
a loss of trade.
Many small village pubs have a small but widely
dispersed customer base and are not served well by public transport.
Often a car is the only means of transport to these pubs. Customers
may be less likely to be prepared to go out if one drink will
take them close to the drink/driving limit.
The functions of pubs in rural areas goes far
beyond the serving of drink and food. They are at the heart of
their communities, often providing the only focus for collective
social life and for entertainment, sports and charitable activities.
The general threat to the rural pub and the community it serves
has been well documented by the Countryside Agency and its predecessors.
The Countryside Agency has said that every week six village pubs
in the UK are closedusually sold for housing, and therefore
not to be reopened.
We trust the short precise we have provided
versus your brief will add value to the Scottish Affairs Committee's
In addition as previously stated we have included
separate handouts to provide easy to read additional background.
Brewers' and Licensed Retailers' Association of
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