Trade disputes effect of UK alcohol policy

5th March, 2013 by Gabriel Stone

As new figures from HM Revenue & Customs show a further drop in UK alcohol consumption, trade bodies have stepped up their calls against minimum pricing and the duty escalator.

westminsterNoting that per capita alcohol consumption in the UK has fallen by 16% since 2004 to fewer than eight litres, including a 3.3% drop in 2012 alone, the Wine & Spirit Trade Association argued that the decrease made the Government’s proposed minimum unit pricing policy unnecessary.

“The UK is on a sustained downward trend,” remarked Miles Beale, chief executive of the WSTA. “This is real evidence of a fall in consumption in one year equivalent to what the Government’s minimum unit pricing plans were predicted to achieve, but without the time, cost and pain.”

His remarks came as reports emerged of widespread opposition within the Cabinet to minimum unit pricing. With economists estimating that the proposed 45p per unit would add an extra £100 to a family’s drinks bill, one minister told the Daily Mail such a move would be “political suicide”.

Beale echoed this point, saying: “UK consumers are already feeling the pinch from increased energy prices, fuel duty and wage freezes, the last thing they need is more alcohol price hikes too. Let’s remember that the UK is already one of the most highly taxed counties in Europe for alcohol.”

The British Beer & Pub Association also highlighted the pressures imposed by current UK alcohol duty rate. It argued that the government could save “thousands” of jobs without any loss in revenue by scrapping the next phase of the duty escalator, which is due to be announced in the Budget later this month.

According to the BBPA’s latest report, Beer, Pubs & the Budget 2013, the current duty escalator is failing to bring in extra revenue.

Research by Oxford Economics calculates that a tax freeze would raise an additional £5 million across the whole tax base. This would be generated primarily though a boost to employment tax revenues and a reduction in the social security payments currently arising from reduced employment in pubs.

The report also suggests that a freeze on beer duty alone would save over 5,000 jobs, increasing to nearly 10,000 by 2014/15, the majority of which relate to young people working in pubs.

Pointing out that UK beer tax is 13 times higher than in Germany and represents 50% of UK brewers’ turnover, the BBPA noted that UK beer drinkers pay 40% of the total beer tax paid across Europe, despite consuming just 13% of its beer.

Summing up its findings, BBPA chief executive Brigid Simmonds remarked: “Far from hitting the bottom line, a duty freeze would raise revenues, protect thousands of jobs, allow us to create yet more jobs and help one of our greatest national assets – our network of much-loved British pubs, still struggling in difficult economic times.

“I hope this compelling analysis will persuade the Government that now is the time for change.”

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