Beer and cider drinkers and publicans might have grounds for celebration. The inclusion of a “Brexit pubs guarantee” promises to increase the tax relief on draught beer from 5 to 9.2%, making the duty on pints in the pub 11p lower than the duty in the off-trade. “British ale may be warm, but the duty on a pint is frozen,” joked Hunt.
That was the extent of the chancellor’s geniality towards the industry. From 1 August, other alcohol categories will see duty increase by 10.1%, in line with inflation, alongside the increased duty on higher abv drinks that was unveiled in 2021. The Wine and Spirit Trade Association (WSTA) puts that at a duty increase of 44p on still wine, the biggest single duty hike since 1975, vodka by 76p, and fortified wines greater impacted with port set to rise by £1.30 a bottle.
It’s the first movement seen on alcohol duty since it was frozen in the 2020 Autumn Budget by now prime minister Rishi Sunak.
“The Government’s decision to punish wine and spirit businesses and consumers is staggering,” said Miles Beale, chief executive of the WSTA.
“This budget directly contradicts what this government claims it is trying to tackle. It will further fuel inflation. It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic.”
The Scotch Whisky Association (SWA), which had urged the government to continue its duty freeze back in December, has accused Hunt of breaking a pledge made by the UK government in 2019 to “review alcohol duty to ensure our tax system is supporting Scottish whisky and gin producers”.
“This is an historic blow to the Scotch Whisky industry,” said chief executive of the SWA Mark Kent.
The largest tax increase for decades means that 75% of the average-priced bottle of Scotch whisky will be collected in tax, reducing already tight margins for an industry which employs tens of thousands of people and invests hundreds of millions annually across the UK.
“We have been clear with the UK government that increasing duty would be the wrong decision at the wrong time, so it is deeply disappointing that one of Scotland’s largest and longest-standing industries has been treated in this way. The industry continues to grapple with significant domestic headwinds, including the soaring cost of energy, intense pressure on the hospitality sector, and increasing regulatory burdens like the Deposit Return Scheme. This tax hike just adds to the pressures on the sector and breaks the UK government’s commitment to support Scotch.”
