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Trade and national press divided on duty

Published:  07 March, 2024

Taking a glass-half-full approach, much of the right-wing press applauded Jeremy Hunt’s extension of the alcohol duty freeze till February 2025, described as a ‘victory for drinkers’ up and down the country by one tabloid. 

Hunt told The Commons: “In the Autumn Statement I froze alcohol duty until August of this year. Without any action today, it would have been due to rise by 3%. So today I have decided to extend the alcohol duty freeze until February 2025.

“This benefits 38,000 pubs all across the UK – and on top of the £13,000 saving a typical pub will get from the 75 per cent business rates discount I announced in the autumn.

“We value our hospitality industry and we are backing the great British pub,” Hunt concluded.

Those in the drinks trade, however, took a glass-half-empty approach, and for good reason – in August last year, the government introduced the largest alcohol duty increase for 50 years, adding 20% to the tax on 85% of all wines in the UK and 10% on full strength spirits. 

Since those hikes, Treasury coffers are down by almost £600m for all alcohol categories, another duty increase would make an already bad situation worse, which is why most in the trade have refrained from applauding the government at this time.

Perhaps most concerning of all, is the government’s decision to press on with its plans to implement a new tax regime in February 2025, which will see duty on wine increase incrementally based on abv.

From February a single amount of duty paid on wines between 11.5 -14.5% abv, currently £2.67, will be replaced by up to 30 different payable amounts from £2.45 - £3.10 per bottle.

“It is hard to see how this new system could be made any more complicated. It is tough for a small company with a few hundred wines to sell,” said Steve Finlan, CEO of The Wine Society.

“For The Wine Society with tens of thousands of wines stored in-bond, it is close to unworkable, yet another mountain of red tape and more costs for the consumer to bear,” he added.

Since 2010 the government has increased fortified wine duty by 90%, still wine duty by 58%, spirits duty by 33% and beer duty by 21%, while over the same period, the rate of inflation is 47%.

Ed Baker, MD at Kingsland Drinks added: “We also stand united with the WSTA in our frustration at the Chancellor’s decision to scrap the easement for wine duty, which will lead to costly red tape, added complexity and price uncertainty for consumers.  We urge the government to see sense and listen to the industry on this critical matter.”

Meanwhile, Nicola Bates, CEO of WineGB, saw the Budget as another missed opportunity for the government.

“Overall, while we are relieved that duty has not increased in today’s Budget, it is a disappointment,” Bates said.

“The government has missed an opportunity to accelerate domestic wine producers’ growth. We need the regulatory burden reduced, so small businesses can get relief, and we should introduce cellar door support; to better encourage wine tourism. Unfortunately, this Budget hasn’t addressed these omissions in the recently changed duty system. As such domestic wine producers are at a disadvantage compared to their overseas counterparts who receive more favourable terms from their governments.”

North of the border the Scottish Licensed Trade Association (SLTA) reiterated its concerns for Scotland’s hospitality sector as a result of ongoing inaction by both the UK and Scottish governments.

“There was no response to pleas from SLTA and other industry groups for a VAT reduction for the hospitality sector in the chancellor’s Autumn Statement last November, so today’s news is extremely disappointing but predictable,” said Colin Wilkinson, MD of the SLTA.

“Doing so in his Spring Statement would have brought some welcome relief to businesses across the hospitality and licensed trade spectrum which are struggling with huge utility bills and other costs.”