Thursday, 12 December 2013

Newark and the Budget

I've mentioned the 1909 People's Budget before. It was a key moment in British political history, the moment when the House of Commons finally gained supremacy over the House of Lords.

In order to finance social reforms - what amounted to the birth of Britain's welfare state - a whole string of new or increased taxes were introduced. An increase in income tax for the better off, a tax on land ownership, a duty on car ownership and petrol. Then there was the one that got the brewers' knickers in a twist - a huge increase in the cost of a brewing licence.

"Newark and the Budget.—There is a great outcry in Newark against the treatment of the licensed and brewing trade in the Budget. The staple trades at Newark are brewing and malting, and a moderate computation puts the loss to the town of the new licence duties at not less than £10,000 a year. It is impossible to make up that extra taxation out of present profits realised on present prices; therefore, the local brewers say that beer must be increased in price. Newark has been built up by the manufacture of superior beer, and to lower its quality would be to invite total extinction. The only way country brewers have, in the last fifteen years, been able to compete with Burton, and to attract some of the trade, has been by brewing sparkling ales of equal quality.—Mr. E. K. Marsland, managing director of the Castle Brewery, Newark (Messrs. Hole and Co.), says that the new tax of £1 for the first 100 barrels and 12s. for every fifty afterwards will mean that, instead of his firm having a registration fee of £1 to pay for the privilege of calling themselves brewers, they will be called upon for £600. It works out the equivalent to an increase of 3d. per barrel on the beer duty, which nominally stands now at 7s. 9d. per barrel. As the firm will called upon to pay the extra licence duty on their tied houses, fixed at 50 per cent. on the assessable value, it is estimated that the cost of the new taxation to Messrs. Hole and Co. will be rather more than £5000 per annum. There is no help for it but to raise the price of beer.—Mr. D. Warwick (of Messrs. Warwicks and Richardsons, Ltd.) says that it is impossible for the brewers and licensed victuallers, taxed, as they are, to the hilt at present, to bear the increased charges proposed to be put upon them by the Budget. They can only meet the charges in two ways — by supplying a cheaper and much weaker beer at current prices, or by raising the retail price slightly to meet the new imposts. He favours the latter course.—Whiskey has been advanced 6d. per bottle in Newark, and 1d. per glass. Tobacco is up 0.5d. per ounce, and on the cheaper sorts 0.5d. per half-ounce, that is, instead of 1.5d. half-an-ounce, the poor man's pipe now costs 2d. Those who can I afford it buy it in ounces. There is much grumbling, especially amongst the "Woodbine" smokers, the penn'orth cigarettes having been reduced in number."
Stamford Mercury - Friday 07 May 1909, page 2.

You know what's really great about this? It lets me calculate the quantity of beer Holes were brewing at the time. It's a simple enough calculation £599 comes to 998.33 12 shillings. Multiply that by 50 and add a 100 and you get pretty much exactly 50,000 barrels. A decent amount, but by no means enormous.

Time for a bit of contextualisation. Another article I found about the budget specified how much more licence duty Guinness, Bass Truman and Whitbread would have to pay:

"That brewers will be very hard hit by the new licensing proposals becomes more and more evident. Under the system ; which has been in force for years every brewer, large or small, simply pays £1 duty. Under the Budget proposals they will have to pay £1 for the first hundred barrels and 12s. for every additional fifty barrels. It seems certain, therefore, that the beer drinker will be called upon pay his quota to the tax in some form or other. The enhanced tax will, it is said, cost the great firm of Guinness from £27,000 to £28,000 per year. It is expected that Messrs. Bass will not pay less than from £16,000 to £17,000 per year, and there are many breweries in London and the provinces which will be taxed the extent of £10,000 per annum. A representative meeting of the brewers was held at Burton-on-Trent on Monday, under the presidency Mr. John Gretton, M.P. The proceedings were private, but it was officially stated that a resolution was passed agreeing to a basis for an increase of prices to take effect should the new taxes be imposed.

. . . . .

In the Times, on Wednesday, Messrs. E. N. Buxton and F. P. Whitbread, taking the figures for the two great Breweries which they represent, show that the duty which they will now have pay on on-licenses amounts to £120,722, compared with £30,977 under the old system — an increase of £89,745. They estimate the new manufacturer's license imposed in the Budget as mulcting them in an additional £15,000, or total of £104,745 in new taxation payable by these two firms alone. As these firms paid only £61,300 in dividends to their Ordinary shareholders last year, comment, as the writers say, is needless."
Grantham Journal - Saturday 08 May 1909, page 7.

Doing the same calculation, I make Guinness's output 2.25 million barrels, Bass's 1.42 million and Truman and Whitbread combined 1.25 million. That's a totally different scale of operation compared to Holes.

The budget was initially defeated by the Lords, prompting a general election which the Liberals won by the skin of their teeth, though they failed to get an overall majority. Threatened with the creation of hundreds of new Liberal peers, the House of Lords backed down and passed the budget in a slightly modified form. The increased charges for brewing licences were one of the provisions which did make it into law.

It was tricky to be sure of that last bit. But, fortunately, much UK legislation is available online. Including the 1910 Finance Act.

You can understand why people in Newark were upset at the proposals. Malting and brewing were the town's largest sources of income. Any threat to that income could have serious consequences for the local economy.

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