Friday 8 October 2010

Welsh Assembly Government fails to support drinks industry

The Minister has spoken and his word is 'No'. That's after the expense the Assembly went to produce the report into the drinks industry in Wales. This report was published in July but the Minister has only just responded to it, no doubt busy with freebies at the Ryder Cup. Still at least this member of the Welsh Assembly Government was not so stupid as to miss their junket to India as they can not use the 24 hour clock.
At the time the report was published I wrote, some did say cynically,
"So it is now up to the Welsh Assembly Government to act on the recommendations made by the Rural Development Committee, something we can but look forward to, though don't hold your breath."
The response to the report has now been published and the Welsh Assembly Government has chosen to ignore most of the findings. No surprise from me there. The Association of Welsh Independent Brewers (AWIB) has responded to the Ministers reply and has described the attitude of the Minister as "particularly disappointing".
To make the full report easier reading it has been colour coded:
Recommendations in blue
Ministers response in green
AWIB response (where given) in red

Recommendations from the report:

1.The Welsh Government should support research into the potential of barley and hop cultivation in Wales, and work with the Welsh brewing industry to support the development of these crops in Wales with a view to giving Welsh beer products a stronger local provenance, and its contribution to Welsh agriculture.
Response: Accept in part.
Farmers wishing to grow alternative crops, which includes hops and malting barley can have access to up to five days of subsidised technical agronomy advice through the farm diversification element of the Whole Farm Plan mechanism delivered by Farming Connect. There is also an additional 3 days diversification advice available for a new business venture.
The Farming Connect Development Centre for alternative land uses (CALU), also provides technical advice to farmers on alternative crops in the form of demonstration events, articles for GWLAD and online advice.
There is currently no financial incentive available to support farmers who wish to grow these crops, however barley is eligible for single farm payment on land with current entitlements. Hops, on the other hand aren’t listed individually as a crop, can be classed as horticulture so can be entered under that code.
Production of Welsh hops and barley can only be stimulated by commercial demand, production and technical expertise for producing fodder barley is similar to that of malting barley – however farmers will need to be reassured of a guaranteed market, and require commitment to undertake change in production.
Financial Implications
Funding for this option is contained within the Farming Connect budget. 
AWIB Response to Recommendation 1.
 As we argued in our submission, we would greatly welcome all support made available to Farmers to grow malting barley and hops in Wales, and see a commercial value in being able to source our ingredients locally. We would like to see activity on behalf of the WAG to encourage and support welsh farmers to grow malting barley and hops, either by direct funding or by acting as a broker between farmers and maltsters. We do not believe that the current situation is specific enough for farmers, and that the information and contacts need to be actively disseminated. This will require both farmers and WAG officials to have the relevant information and understanding to be able to progress.

2. The Welsh Government should encourage maximum uptake by farmers of funding through the Glastir scheme to support the planting of orchards so that all Welsh cidermakers are able to source their apples from Wales. 
Response: Accept in principle.
The Glastir scheme contains provisions for the restoration of existing orchards and the development of new orchards. However, entry to the scheme is voluntary and it may be the case that farmers opt for other prescriptions that better suit their farm business. The technical guidance provided for the all-Wales element will spell out the environmental benefits of maintaining and enhancing orchards.
Financial Implications
Funding for this option is contained within the Glastir budget.

 3. The Welsh Government should examine examples elsewhere, such as the New Zealand wine industry where massive growth has been achieved over a short period of time, to learn lessons about how the sector in Wales can be developed to its full potential.

Response: Reject.
In considering its priorities the Welsh Assembly Government has to make decisions based on pragmatism and value for money. The industry is very small in Wales in part because the majority of our growing area does not have the same degree of suitable climate or soils for vines as New Zealand does. Wales is in general terms on the outer limits of the growing range.
Vines prefer calcareous soils, whereas the majority of Wales is on acid soils. Other factors such the length of our sunlight and our wet climate are important factors in grape ripening and disease control, which can makes grape production challenging.
The Welsh Assembly Government supports farmers looking into diversification. Farming Connect operates a number of fully subsidised Diversification Awareness Raising Seminars which provide businesses with a realistic overview of the essential elements of developing a farm or forestry diversification before embarking on the one to one mentoring through the Farming Connect Whole Farm Plan. Attendance at the Awareness Seminars is fully funded through Farming Connect for all eligible businesses. Any business expressing an interest in a diversification opportunity will be encouraged to attend the Awareness Seminars before undertaking any one to one Mentoring.
One to one mentoring is available through the Whole Farm Plan element of the Farming Connect service. Eligible farmers are able to access up to five days subsidised support in a variety of topics with an extra three days advice specifically looking at diversification.
The Centre for Alternative Land Use (CALU), one of the five fully funded sector specific development programmes covers wine production within its remit on horticulture. The aim of the programme that CALU are delivering on behalf of Farming Connect is to ensure that information is available to help producers in Wales adopt new practices, benchmark performance, share ideas, address market needs and encourage innovation. This in turn will help farming businesses become more sustainable.
Financial Implications:
4.The Welsh Government should ensure that it is fully involved in any discussions at the UK level regarding the potential introduction of a minimum price for alcohol. The Welsh Government should liaise with industry bodies in Wales and ensure that their views are taken into consideration by the UK Government.

Response: Accept in principle.
The Welsh Assembly Government 10 year (2008-2018) Substance Misuse Strategy “Working Together to Reduce Harm” includes commitments to work with the UK Government to take stronger action to tackle alcohol related health harms and alcohol related crime and anti-social behaviour, and we have consistently pressed UK Ministers on these issues. More recently we have supported calls for a minimum price.
The Health and Social Services Minister wrote to the new Secretary of State for Health in May re-stating the Welsh Assembly Governments position and Andrew Lansley, SoS(H) has agreed to keep us informed of any developments.
The views of industry will clearly be important in any consideration of the potential economic impact of a minimum price for alcohol, but they are also able to feed in views via trade bodies. It is also important to bear in mind that the evidence of the link between affordability, consumption and health harms in relation to alcohol is now very strong.
Financial Implications:
No financial implications for Welsh Assembly Government

AWIB Response to Recommendation 4.
 The AWIB does not support the concept of Minimum Pricing - not only do we feel that the setting of the price of our products by Government is a dangerous precedent, and commercial madness, but it also has no positive impact on the Treasury - only the retailers will gain.
 We also disagree strongly with the final statement in the response in this section :
“It is also important to bear in mind that the evidence of the link between affordability, consumption and health harms in relation to alcohol is now very strong.” The evidence as a whole shows no such thing, and there is plenty of evidence (for example the Swedish situation) that shows that higher pricing does not lead to lower consumption, and that people tend to drink in less moderation where very high pricing structures exist.
 We are also extremely concerned with the WAG’s perception that a minimum price should be introduced on health grounds - whilst there is undoubtedly a minority of people who drink to excess or even harm, the vast majority of people enjoy alcohol moderately, safely and responsibly.
We feel that other options should be investigated, such as a ban on below-cost selling by retailers, where the cost price includes the whole cost of production, transport, stocking and taxation, as opposed to the suggestions of certain interested parties. Other options could include a specific tax on bottles, cans, PET, etc or a specific tax paid on off-sales by licensees. This would both drive up the prices in shops and benefit the Treasury.

5.The Welsh Government should ensure that it is fully involved with the on-going discussions at the UK level regarding voluntary or statutory reform of the beer tie. The Welsh Government should make clear to the new UK Government that it supports the reforms announced by the previous Government, and push for their implementation. 
Response: Reject in part
Although competition policy is not devolved, the Welsh Assembly Government will ensure that it stays involved in ongoing discussions relating to the beer tie. The Office of Fair Trading (OFT) has recently ruled that the beer tie is not anticompetitive and did not restrict competition.
Financial Implications

AWIB Response to Recommendation 5.
 This clearly shows the lack of knowledge and understanding by the author of this response. The OFT has yet to issue a final report, following on from CAMRA’s super complaint and subsequent appeal. The recommendation clearly states that the WAG should be fully involved with discussions at a UK level, and that it should be involved fully in any legislation drafting that takes place. This is neither an onerous nor unnecessary function for the WAG, as any legislation will have an impact on companies operating in Wales.

6. Should the UK Government not push through with the reforms, the Committee calls on the Welsh Government to investigate the possibility of bringing forward its own legislation to give every Welsh pub and retailer the right to stock at least one locally produced beer or cider.
Response: Reject.
As indicated in the response given at Recommendation 5, the Welsh Assembly Government does not have legislative competence in this area. In order to bring forward its own legislation in this area, the Assembly Government would need to seek the agreement and co operation from the UK government to obtain those additional powers. The likelihood is that if the UK government is not pushing through these reforms there may be potential difficulties in obtaining that agreement.
In addition, the idea of a 'right to stock locally produced beer or cider' may potentially pose legal difficulties because such a proposal may be considered to breach of EU law in terms of distortion of trade, anti competition and discrimination. Careful consideration of the legal issues would need to be carried out before such a recommendation could be accepted or rejected by Ministers.
Financial Implications
AWIB Response to Recommendation 6.
 We are extremely disappointed that this recommendation has been dismissed out of hand. Whilst the WAG may not yet have legislative competence in this area, it should be taking an active interest in the situation. The recommendation further calls on the WAG investigate the possibility of introducing a “guest beer” option for welsh retailers. We do not for an instant believe that allowing a provision for a locally produced and sourced beer or cider could in any shape or form be deemed to be anti-competitive - the retailer will still have the right to stock whatever products they normally do, just there will be an option to also stock a locally produced beer or cider that they normally may not be able to stock under the current terms of their business.

We feel that the WAG can actively look at what can be done to open the market place to welsh products, and indeed should be doing so to help promote welsh produce in Welsh retailers.

7. Specific guidance should be issued to local planning authorities, clarifying the manner in which the planning system should operate with regard to vineyards, brewers and pubs to ensure consistent application of guidelines throughout Wales.
Response: Reject.
It should be noted that vineyards, being an agricultural use, are generally outwith of the planning system which has no control over the agricultural uses carried out on land. However, planning permission may be required for wineries, breweries and public houses. Planning policy in Wales has recently been revised (Planning Policy Wales 2010) and this seeks to promote sustainable development, this policy is applicable across Wales. PPW 2010 also promotes rural diversification, and requires local planning authorities to take into account the role that public houses play in their local community, when exercising their functions. It is for local planning authorities to interpret national policy in their Local Development Plans reflecting local priorities and circumstances using locally appropriate evidence. The Assembly Government scrutinises development plans to ensure that they are in conformity with national policy.
Financial Implications

AWIB Response to Recommendation 7.
 Again, the author has completely missed the point of the recommendation. The call here is for consistency of application of the current legislation in all areas of Wales - this is not happening now, yet it is common sense to suggest that the laws should be applied equally and consistently in all areas of Wales. The WAG needs to investigate why this is not happening, and issue guidance where applicable.

8. The Welsh Government should follow the example of the UK Government in giving local authorities new powers to protect pubs from being demolished or from being sold with restrictions on use as a pub, including implementing the relevant sections of the Sustainable Communities Act.
Response: Reject.
Any new powers would be outwith of the planning system. Currently, pubs in Wales may be protected under the planning system if they are a listed building or in a conservation area. However, there are no powers under the planning system to protect a specific type of business. Applications for new pubs may have conditions attached to them limiting their future uses to ensure that they are not lost to other uses in the future.
Financial Implications
AWIB Response to Recommendation 8.

Given these laws already exist on the UK statute books, we are extremely disappointed with this response. Given that we understand that the WAG does have legislative competence in this area, we feel this is something that should be looked at.

9. The Welsh Government should review CADW’s approach to listing pubs of historical and cultural interest so as to ensure that buildings which are an important part of Welsh communities’ heritage are not lost forever. If necessary, the Welsh Government should introduce legislation to allow the protection of buildings such as public houses that are of importance for social and cultural reasons.
Response: Accept in Part
The Welsh Assembly Government in its response to the report of the National Assembly’s Petitions Committee Save the Vulcan: Protection of Historic Buildings has already given a commitment that Cadw, the Assembly Government’s historic environment service, will by autumn 2010 prepare advice on listing criteria and local lists and, within that, will include specific guidance on buildings with social and cultural interest.
The Welsh Assembly Government recognises the concern about the precipitate demolition of locally important buildings which do not reach the standard for national listing. It is open currently to local planning authorities to prepare lists of buildings of local interest if they so wish and to support them with policies in their Local Development Plan. However, the Welsh Assembly Government accepts that there is a need for discussion on ways locally important buildings might be better safeguarded and is considering how this might be taken forward in the light of current work aimed at promoting local distinctiveness in the historic environment.
It may be possible to provide safeguards against demolition for buildings on local lists through the land use planning system. This will be explored with the Minister for Environment, Sustainability and Housing and her Planning officials.
Financial Implications:
Any costs which arise will be accommodated within the Welsh Assembly Government’s budget. 

10. The Welsh Government should do everything in its power, including lobbying the UK Government, to ensure that the progressive beer duty which has been fundamental to the growth of small breweries in Wales over recent years is maintained. 
Response: Reject in Principle
We will press the UK Government on the issue of progressive beer duty and seek to influence a strategy of taxation which will both aid the development of the industry whilst balancing this with the Welsh Assembly Government’s substance misuse strategy. The Assembly Government has been calling for
an increase in taxation and linking levels of tax more closely to alcohol strength. We are particularly pushing for cider to be brought in to line with beer of equivalent strength. Proposals for the Assembly Government to lobby for the maintenance or introduction of relief on duty for alcohol could go against this.
Financial Implications:
None other than possibly for UK taxation revenues. 

AWIB Response to Recommendation 10.
 We are extremely disappointed with this response - it shows a total lack of understanding in both Progressive Beer Duty (PBD) and the nature of those that benefit from it. We are also extremely concerned that the author equates the provision of PBD with the substance misuse strategy.

Since the introduction of PBD in 2002 some 40 breweries have opened in Wales alone. If PBD was withdrawn, we would expect many of these businesses to struggle, and the knock on effect on the rest of the hospitality sector would be very pronounced. Currently on a UK level, the total volume of beer produced per year that benefits from the full 50% rate of relief under PBD is less than the annual production of Fuller’s Brewery in London. Given the nature of the small, craft brewers who benefit from PBD, it a nonsense to equate their products with the harmful effects of binge drinking and alcohol misuse - these producers mainly create cask beers that can only be consumed in the responsible, monitored environs of a public house.

We call upon the WAG to reconsider this recommendation and to support the Welsh Brewing industry and to lobby the UK government to seek to maintain or even extend PBD. We would also point out that the level of taxation on beer is already one of the highest rates in Europe, and evidence is suggesting now that the ever increasing taxation of beer is actually leading to declining revenue for the Treasury as pubs become ever more expensive whilst the multiple retailers continue to use beer as a loss-leader.

We would request that WAG re-evaluates its knowledge and understanding of the welsh brewing industry, and looks for ways of positive support as opposed to constant demonisation.

11. The Welsh Government should lobby the UK government to introduce a progressive duty for wine producers so as to give a boost to the development of small vineyards.
Response: Accept in part
This is a matter for HM Treasury to undertake, we are aware that there is some concern over the lack of consistency in the way that wine is currently taxed. The UK Government is committed to reviewing alcohol taxation and pricing. On 13 July the Home Office and HM Treasury jointly launched its review on this matter. The Home Office will lead the work on pricing and HM Treasury on taxation matters.
This is not a formal public consultation, but evidence from industry and all interested parties is being collated. These proposals will consider the rates and structure of duty on different products; the differential between duty rates on low and high strength products; and the interaction between tax and price potential options to increase the taxation of high-strength drinks; and other targeted measures that can impact on public order or public health outcomes.
Financial Implications:
AWIB Response to Recommendation 11.
Given that the previous response was suggesting a lack of support for PBD, here the WAG agrees to accept a proposal a progressive duty structure for wine! This shows, again, a lack of understanding of the welsh drinks industries, and the lack of consistency in WAG policy.

12. The Welsh Government should encourage the UK government to introduce a graded duty structure for small cider producers, so as to remove the current disincentive to expand above 7,000 litres

Response: Accept in part
In line with the answer provided to recommendation 11, the UK Government is currently undertaking a joint review on this matter. The Home Office will lead the work on pricing and HM Treasury on taxation matters, evidence from industry and all interested parties is being collated.
Financial Implications:

13. The Welsh Government should draw up a distinct strategy for promoting and marketing the wine, beer, cider and spirits sectors. As well as cross-cutting activities, the strategy should include action plans tailored specifically to the needs of each sector. This strategy should link into the Welsh Government’s strategies for food promotion and for tourism.
Response: Reject
An overarching directional Food Strategy for Wales is currently out to consultation, Food for Wales, Food from Wales 2010-2020 looks to identify and address the issues to prepare for and meet the complex challenges ahead. It would be presumptive to make a commitment to undertake this recommendation before this consultation process comes to a conclusion. Once the Strategy is in place, a review will be undertaken by the Food & Drink Advisory Partnership and officials to ensure that existing sectoral action plans and sub-groups are fit for purpose and assess whether further action plans need to be put in place. This recommendation will be taken forward as a suggestion received in the Food Strategy for Wales consultation and considered during the consultation responses review.
As detailed in the response to recommendation 16, work is already being undertaken to promote the wine, beer, cider and spirits sectors.
Financial Implications:
AWIB Response to Recommendation 13.
 We believe that this recommendation should be accepted - whilst there is an ongoing consultation, that does not stop the WAG from observing and if necessary influencing this Food Strategy to ensure that the recommendation is followed 

14. The Welsh Government should work with Welsh brewers to design a marketing campaign to promote an image of Wales as a country of small breweries producing quality beer, making Welsh beer a recognised quality product both in Wales and across the UK. 
Response: Reject in part
The Welsh Assembly Government managed Wales the True Taste Awards provides the legal route for the promotion of all food and drink products produced in Wales including wine, beer cider and spirits. We co-ordinate an effective PR function for award winning businesses which provides profile not only in Wales but across the UK and further afield.
Under the Wales the True Taste banner we aim to promote the diversity of products available from Wales and the drinks industry offer is critical to that. The fact that products have been judged by a high profile and respected panel of judges also underlines the commitment we have to recognising quality food and drink.
I would recommend that the sector continue to work with my officials to develop their businesses and products and make use of the Wales the True Taste brand if they are successful in winning their category. I am confident that the sector can embrace the values of the True Taste brand and work with us to convey a message to the consumer that we are indeed a small country producing high quality food and drink.
Should the industry decide to work together on a joint marketing proposal, this could be facilitated by the Welsh Assembly Government.
Financial Implications:
The continuation of the Wales the True Taste Food and Drink Awards carry the financial implication. The awards provide the legal vehicle by which we undertake the vast majority of our industry support activities.

AWIB Response to Recommendation 14.
 The True Taste of Wales awards has one category for drinks, and only the winner receives direct promotional support - as they should. However, this recommendation was calling for a specific generic marketing campaign (distinct from True Taste) to help promote the welsh brewing industry, both within and outside of Wales. We would hope that the WAG can find a way to help, either through AWIB or some other organisation to help promote and market Wales’ excellent ales.

15.The Welsh Government should work with industry to investigate the benefits of introducing a recognisable emblem indicating that produce is a drink of Welsh origin. Combined with a campaign promoting the quality of Welsh drink produce, the emblem should become a guarantee of both origin and quality.
Response: Reject in part
In line with the answer provided to recommendation 14, the Welsh Assembly Government is committed to raising the profile of Welsh Food and Drink via the Wales the True Taste brand and associated marketing collateral.
We are also delivering a scheme to deliver European Protected Food Names status and would encourage drink producers to investigate this avenue which will allow their products protected status within the European Union. This will have advantages for companies particularly within the export market to the European continent where such designations have high consumer recognition.
Again, I would highlight the work that is being delivered by my officials within Food, Fisheries and Market Development Division and encourage the industry to engage in this process to raise the profile of its products.
Financial Implications:
The continuation of the Wales the True Taste Food and Drink Awards carry the financial implication and also the public relations function. The Awards event also benefits from commercial sponsorship from the private sector. Whilst this is the case, it is a much more effective campaign and marketing tool which would not be affordable to small brewing or drink businesses. 

AWIB Response to Recommendation 15.
 Again, the author has completely missed the point of the recommendation - there is a desire for an identifiable logo or emblem to signify welsh provenance. True Taste does not do this - it is an emblem for the winners, not all welsh beers.
With regard to the use of the EU’s Protected Food Names and PGI etc, these are extremely expensive and complicated to maintain - and are almost certainly beyond the scope of most welsh brewers - hence the desire for a WAG supported scheme to help promote and market Welsh beers.

16. The Welsh Government should improve its own expertise and capacity to support the Welsh wine, beer, cider and sprit industries by appointing an official within its Food and Market Development Division with dedicated responsibility for developing and promoting the sectors in Wales.
Response: Reject in part
A finite amount of resources are allocated to the market development of the food sector in Wales. The Assembly Government’s Food, Fisheries & Market Development Division’s (FFMDD) remit is to support the development and growth of food production, and food and drink processing industries in Wales. To make certain that this is achieved a broader approach has been taken to ensure that the division’s activity is all encompassing.
The Assembly Government is not in a position to take this recommendation forward due to limited resources, and the Assembly Government must prioritise its interventions. Despite this the Welsh Assembly Government at present supports four dedicated festivals for the drinks sector. Total support for these 4 festivals total £63,000 funded by the Food Festival Grant Funding Programme, part of the Supply Chain Efficiencies Scheme, funded by the Rural Development Plan for Wales 2007-2013 which is financed by the Welsh Assembly Government and the European Union.
FFMDD also takes a lead role in coordinating ‘Welsh Wine Week’ which aims to spark interest in Wales’ wine producers and vineyards where producers across the country offer tastings, tours, and special promotions in order to show the quality of Welsh wine.
Producers also have an opportunity to enter into the annual True Taste Awards, managed by the Welsh Assembly Government with a category devoted to alcoholic drinks. To date 12 producers in the sector have benefited from the PR support under the True Taste banner as well as the opportunity to participate in a calendar of consumer and trade events.
Financial Implications:

AWIB Response to Recommendation 16.
 Given the lack of understanding and knowledge shown by the author of this report, we would call on the WAG to re-evaluate is response to this recommendation, and appoint or train someone with actual knowledge of our industry as a matter of urgency.
 Whilst there is some excellent support shown by the WAG, we feel that there is more that can, and should, be done to promote welsh drinks.

17. The Welsh Government should establish a forum bringing together producers and associations in the wine, beer and cider sectors to exchange ideas and identify priorities for collaborative working within their respective sectors.

Response: Reject in part.
An overarching directional Food Strategy for Wales is currently out to consultation, Food for Wales, Food from Wales 2010-2020 looks to identify and address the issues to prepare for and meet the complex challenges ahead. It would be presumptive to make a commitment to undertake this recommendation before this consultation process comes to a conclusion. Once the Strategy is in place, a review will be undertaken by the Food & Drink Advisory Partnership to ensure that existing sectoral action plans and sub-groups are fit for purpose and assess whether further action plans need to be put in place. This recommendation will be taken forward as a suggestion received in the Food Strategy for Wales consultation and considered during the consultation responses review.
Financial Implications:

18. The Welsh Government should proactively seek to support the AWIB and UKVA by funding supply chain efficiencies programmes along the same lines as it has done for the Welsh Perry and Cider Society.

Response: Accept in part
The Welsh Cider and Perry Society qualify for support because they are working with primary producers (orchard owners) who are adding value to their own produce and that kind of approach could be taken with the UK Vineyards Association if they were working exclusively with Welsh vineyards.
The same criteria would not apply to brewers who in the main are not growing barley and/or hops so while the aims of the support programme might be similar this group would be less likely to qualify for this kind of support.
The Supply Chain Efficiencies Scheme is now fully committed and so there is currently no opportunity for any new proposals to be developed but this will be reviewed before the end of the Rural Development Plan. Should additional funding become available then the UKVA would have the opportunity to discuss any project proposals they may have.
Financial Implications : None 

AWIB Response to Recommendation 18.
 We are delighted that the WAG accept that there is potential to support the AWIB, and although funding along the lines of the Cider & Perry Society may not be applicable, we would be delighted to enter dialogue with the WAG to see what can be done.

 I realise this post is a bit long but I thought it worth quoting all of the relevant information. I especially enjoyed the AWIB quote that the author of the report shows "A lack of understanding and knowledge". Hardly surprising to those of us who have witnessed the goings on in the Parish Council of Cardiff Bay.

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