One of the oldest breweries in the UK is challenging the Chancellor's latest increase in beer excise duties, reports Roger Pearson >

A decision is now imminent in a case in which one of the best-known and oldest breweries in the South East, Shepherd Neame, has taken the Government to court in a bid to keep down the price of beer.

The Faversham-based company is challenging a 1 pence per pint beer excise duty increase and its vice-chairman, Stuart Neame, has warned that the rises could lead to bankruptcies among licensees and pub closures.

The company's counsel, Michael Beloff QC, told Lord Justice May and Mr Justice Moses that the Government's threat to raise the duty was 'a threat to British beer'.

Shepherd Neame, established in 1698, is one of the oldest brewing companies in the country and operates more than 360 pubs. Its legal fight has huge implications for the brewing industry at large.

The company is arguing that the hike in duty is in breach of European law which requires duties throughout Europe to be harmonised.

There is a strong likelihood that the outcome of the case will resolve nothing and it is likely to be referred to the European Court of Justice for a ruling. Whether any moves will be made to put the duty increases on hold pending a ruling remains to be seen.

Beloff, arguing against the increase, said the 'spasmodic, but inexorable increase in excise duty, coupled with the lure of cheaper products in France and elsewhere' had substantially diminished sales of British beer.

At the centre of the case is Chancellor Gordon Brown's 3 per cent increase in beer excise duties, raising them from £10.82 a hectolitre to £11.14 from 1 January 1998.

Beloff said the increases were 'incompatible' with the UK's obligations under EU law and that Shepherd Neame's application depended on the proper interpretation of the application of EU law.

Stuart Neame said that, although for the past four years Shepherd Neame's export of beer had increased, with draught and bottled beers, including its famous Bishops Finger, going to the US, France, Russia and Sweden, he believed the company had been affected, particularly by cross-border imports, because of its location.