Budget 2017: Industry rejoices as Chancellor freezes alcohol duty, but ‘white cider’ is under fire
Duty on beer, cider, wine and spirits will not rise in keeping with inflation, Chancellor Philip Hammond announced in his Autumn Statement on 22nd November.
Although duty will rise with inflation on high-strength, low-cost drinks like white cider in 2019, taxes on all other drinks will stay at the same rate.
Hammond cited tighter household budgets and declining pub sales as key reasons behind the decision.
“Recognising the pressure on household budgets and backing our Great British Pubs, duties on other ciders, wine, spirits and on beer will be frozen.”
“This will mean a bottle of whisky will be £1.15 less in 2018 than if we had continued with Labour’s plans.”
“A pint of beer will also be 12p less, so Merry Christmas Mr Deputy Speaker.”
This is the second time in 15 years that taxes on alcohol have been frozen in a budget statement.
Previously, the government had said that alcohol duty would increase by RPI inflation annually for the whole of this Parliament’s term.
The tax freeze marks a windfall for governing bodies in the drinks industry, who have spent months campaigning to give alcohol a tax break this Christmas.
Reacting to the news, the Wine and Spirits Trade Association’s chief executive Miles Beale said: “We are pleased that the Chancellor has found his festive spirit & listened to the call from the WSTA and its members and has frozen wine and spirit duty.
“He has shown the Govt is in touch with what consumers want & is supporting an industry which is a real asset to British business.”
The British Beer and Pub Association, meanwhile, was just as overjoyed. Chief executive Brigid Simmonds welcomed the news, adding that a freeze on alcohol duty could save pub-goers over £100 million this Christmas.
Freezing beer duty an early Christmas present for beer drinkers & pub goers worth over £100 million. Thank you Chancellor for listening to our campaign. Beer drinkers will raise a glass tonight @PhilipHammondUK
— Brigid Simmonds BBPA (@BrigidSimmonds) November 22, 2017
“Thank you Chancellor for listening to our campaign,” she said. “Beer drinkers will raise a glass tonight.”
The Scotch Whisky Association welcomed the freeze on spirits, but added that more still needed to be done to cut down the disproportionate cost of whisky in the UK.
“We welcome the freeze in excise duty on spirits, which helps support the competitiveness of Scotch – a major UK export – in uncertain times,” Karen Betts, Scotch Whisky Association chief executive, said.
Betts called on a tax cut at the next budget to ensure that British distillers can still compete in an ever-growing whisky market.
“Tax on Scotch is still very high. £4 in every £5 spent on Scotch goes to the Treasury, and we believe this is a missed opportunity. We believe a cut would have delivered more revenues to the government as well as underscoring government support for an important UK manufacturing industry, which supports 40,000 jobs across the UK.”
The budget was an enormous success for Campaign For Real Ale, as the Chancellor also announced the government would extend the £1,000 business tax rate relief for pubs for another year in a bid to save the UK’s endangered pub sector.
“Pub goers were fearing the worst from this Budget but will now be raising a glass,” said CAMRA’s National Chairman Colin Valentine.
“Freezing beer duty will help arrest rising beer prices and keep the British pub going tradition affordable.”
“We welcome the Chancellor’s decision to extend the £1,000 rate relief for pubs for one more year. This shows that the Government is alive to the threats facing English pubs although more needs to be done.
“CAMRA is calling for further action to secure a thriving pub sector and would like this relief to be made permanent and increased to £5,000 a year.”
However, the freeze will not apply to certain products such as “white cider” — high-alcohol, low-cost drinks which the Chancellor referenced in today’s budget.
“Excessive alcohol consumption by the most vulnerable people is all too often through cheap high street, low quality products, especially so-called ‘white ciders’,” Hammond said.
Duty on so-called white cider, which typically has an abv of between 6.9% and 7.5%, will rise from 2019.