Chancellor silent on UK alcohol duties

24th November, 2016 by Lauren Eads

Philip Hammond MP delivered his first autumn statement as UK Chancellor of the Exchequer yesterday, but unusually made no mention of wine, beers or spirits.

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Philip Hammond MP, Chancellor of the Exchequer

The fact that alcohol duties were not mentioned, means duties on beers, wine and spirits are expected to remain as stated in the Spring statement. Earlier this year, the chancellor froze duty on beer and spirits, and lifted a freeze on wine duty, first imposed in 2015 following the WSTA’s ‘Drop the Duty’ campaign.

It means that alcohol duties will not rise until at least the next Budget statement in spring 2017, with no changes made since the last freeze to beer and spirits. Wine duties are expected to rise with inflation.

The Campaign for Real Ale (CAMRA) had called on the UK government to freeze beer duty ahead of the Autumn Statement to help stem the rate of pub closures across the country, and consider an additional cut on beer duty in next year’s Budget.

In response to the Chancellor’s Autumn Statement, Colin Valentine, CAMRA’s national chairman said: “CAMRA welcomes the Chancellor’s decision not to raise beer duty in the Autumn Statement. Pubs are under a huge amount of financial pressure and with UK beer drinkers paying 52.2p of duty on their pint we are seeing more and more people choosing to drink at home rather than at their local. This trend not only hurts UK businesses, but is also contributing to the demise of our communities and affects people’s personal wellbeing.”

“While a freeze in beer duty is welcome, CAMRA would like to see the Government do more to reverse the damage done by the beer duty escalator by cutting duty in the 2017 Budget.”

Pubs have been closing at an alarming rate in the UK. At its worst, CAMRA reported that 31 pubs were closing their doors in the UK every week. This rate has now slowed, dropping from 29 pubs per week in the first six months of 2015 to 27 in the latter half of the year, and now stands at 21 a week.

While there was no mention of alcohol, the chancellor did confirm the doubling or rural rate relief, with rural pubs now able to claim 100% relief on their business rates, worth up to £2,900.

Other changes include a rise to the national living wage of 30p per hour, rising to £7.50. While this is a positive move to support those on low incomes, Brigid Simmonds, chief executive of the British Beer & Pub Association, warned that this would compound the cost pressures already facing the pub industry.

“Increases in the National Minimum Wage and Living Wage represent challenges for our sector, particularly in pubs, where labour costs are high, at between 14 and 25 per cent of operating costs,” she said.

While Simmonds acknowledged that there had been no increases in beer duty rates, she added that duty currently accounts for up to 50% of the costs of a UK brewer and “remains a concern for the industry”.

“Our rate of beer duty in Britain is considerably higher than all other major European brewing nations, and we are now calling on the Chancellor to cut beer duty in the 2017 Spring Budget, and tackle the unfair burden it places on Britain’s beer drinkers, publicans and brewers.”

This week the boss of Mitchells & Butlers, one of the UK’s biggest pub chains and the owner of All Bar One and Browns, warned that rising cost pressures imposed on the pub sector would soon result in an inevitable shakeup of the industry. For its part, Mitchells & Butlers has said it will be selling off 75 of its outlets, and has expanded its partnership with food delivery service Deliveroo to help counter its impact.

Sue Cooper, Co-owner of Little Valley Brewery, based in Yorkshire, added: “With Brexit in progress, the squeeze on our industry is even tighter as costs for raw materials and energy are both rising alongside threats of increased inflation, which is compounded by the uncertainty at this time during the transition out of Europe.

“Furthermore, OBR Chairman Robert Chote is estimating that consumers will be 3% poorer following today’s Statement, meaning harder times for our industry could be on the horizon, however the doubling of Rural Rate Relief is definitely a positive move to support rural pubs across the country. We now urge the Chancellor to offer reassurance to our industry when we need it most”.

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