A number of Cumbrian brewers have been left aggrieved after the Government changed the way it charges smaller breweries for the beer they produce.

Two weeks ago, Parliament passed a host of tax changes as part of a wide shake-up of business rates, including lowering the threshold for breweries to stop receiving some tax breaks on the beer they produce.

Currently breweries who produce less than 5000hl of beer per year - 17,000 pints per week - only pay half of standard beer duty, known as Small Brewers Beer Duty Relief or SBR. The new reduced threshold will mean that, in future, only breweries who produce less than 2100hl - 7,000 pints per week - will benefit from the relief.

Artisan brewery Fell, which has a bar in Penrith alongside their outlets in Kendal, Flookburgh and Greater Manchester, has been critical and may have to call a halt to their expansion plans.

Andrew Carter, managing director and co-founder, said: “Small breweries are being penalised for the benefit of larger breweries. This policy is revenue neutral, it doesn’t benefit the tax payer, it merely benefits larger breweries at the expense of smaller ones.”

The Fell brewery is in line to be impacted as they currently produce around 2500hl a year- 8,000 pints per week.

Since launching in 2013, Fell have become a real success story for Cumbrian industry and rural enterprise, with the SBR and EU grants key to helping them get a market foothold.

Tim Bloomer, Fell co-founder and head brewer said: “Knowing we, along with our customers, are now going to pay more tax so that much larger breweries can pay less, leaves a very sour taste. We were about to pull the trigger on a major expansion that would create new jobs and this law change now jeopardises that. The government have completely let us down.”

The changes has left hundreds of small breweries across the country facing a significant tax increase at a tremendously difficult time due to the Covid-19 pandemic and ensuing lockdown which has caused irreparable damage to the hospitality and retail sectors which Fell and others rely on.

The industry already suffers from the UK’s having some of the highest alcohol duty rates in Europe.

SBR was introduced by then-Chancellor Gordon Brown in 2002 to create a fair system of taxation that recognises that smaller breweries can’t achieve the same economies of scale and low production costs as larger breweries. By enabling smaller breweries to compete, SBR has led to the UK’s craft brewing revolution and the creation of thousands of jobs in microbreweries across the country.

The Carlisle Brewing Company, based on Kingstown Industrial Estate, has stated it felt “disappointed” by the Government’s changes which will benefit bigger companies at the expense of smaller growing breweries.

The family-run brewery, owned by Alain and Alison Davis, was set up in 2013 at the Spinners Arms pub which the couple run, but has since moved and is the only one within the city limits.

It currently produces just under 1,500 pints on average a week at their 10 barrel plant so won’t be immediately affected but Alison stated it will “deter growth and make us and other reconsider plans to grow and expand”.

She said: “It will benefit bigger companies at the expense of smaller ones, the idea behind the duty relief was to create an equal market place and make it fair so smaller companies could compete.

“Brewing is a strange industry as you have big multi-nationals at the top and smaller micro breweries at the bottom end, it can vary in terms of business size.

“What’s been in place has been there to try and make it fair for everybody, if you’re a big company with a larger market share, the economies of scale make it easy for them to compete on price.

“Brewing is quite an aspirational business as well, people can get involved because they purely want to brew rather than to make money so I think it will survive but it could put some investors off or risk a few going out of business which are already struggling from Covid-19. There couldn’t have been a much worse time to make this change.”

The Covid 19 pandemic has proved enormously challenging for these small independent businesses, with the collapse of sales from closed pubs. As manufacturers, many have not been eligible for government grant support schemes either.

The UK’s alcohol duty rates are some of the highest in Europe and the Society of Independent Brewers stated this will affect 150 UK breweries.

According to SIBA’s research, 83 per cent of its members say SBR is ‘extremely important’ to their business and these changes may mean its “not viable” for them to expand. But others, such as those in the Small Brewers Duty Reform Coalition lobby have come out in favour of the changes.

A Treasury spokesperson said “hundreds of breweries” were involved in the initial consultation process, and that small businesses will be able to gradually expand their business, as opposed to taking a leap to produce on a much larger scale to compensate for the relief’s withdrawal.

Since SBR was introduced, the number of UK breweries has risen from under 500 in 2002 to more than 2,000.