Alcohol duty rise delayed until August
In another U-turn, The Treasury is now expected to maintain the duty freeze on beer, wine and spirits until August 2023.
A duty freeze was originally proposed by Kwasi Kwarteng during his brief stay in 11 Downing, but this was then reversed by his replacement as chancellor, Jeremy Hunt, in what was described by some in the industry as a “huge blow”. Hunt’s proposals to raise duties, due to come into effect on 1 February, would have seen 7 pence added to the price of beer, 38p on a bottle of wine and more than £1.30 on spirits in early 2023.
However, an announcement on 19 December from the government said that the freeze would be extended until 1 August, with the chancellor reserving decision on future duty rates for Spring Budget 2023.
Exchequer secretary to the Treasury James Cartlidge said in the House of Commons: “The alcohol sector is vital to our country’s social fabric and supports thousands of jobs – we have listened to pubs, breweries and industry reps concerned about their future as they get ready for the new, simpler, alcohol tax system taking effect from August…That’s why we have acted now to give maximum certainty to industry and confirmed there will be just one set of industry-wide changes next summer.”
The reaction to the news has been largely positive from trade bodies. Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA), said: “We are extremely pleased to hear that the chancellor has listened to our calls not to deliver a double whammy tax hike next year. History has shown that freezing alcohol duty delivers increased revenue to the Exchequer. If duty rates went up by RPI on 1 February, this would have been a crippling blow to the UK alcohol industry and consumers who would have to pay the price for tax rises.”
“Delaying any increase until 1 August means businesses will not have to manage two duty rises in the space of six months,” Beale continued. “We hope that any duty increases applied in August take into account the damage suffered by wine and spirit businesses and the hospitality sector during the pandemic as businesses continue to fightback. We are calling on Jeremy Hunt to cancel double digit tax rises to help cash-strapped consumers and to support the UK’s world-class drinks industry.”
Mark Kent, chief executive of the Scotch Whisky Association (SWA) also welcomed this development: “The duty freeze, which has previously boosted industry investment and government revenue, is a win-win and gives distillers cause for Christmas cheer.”
Campaign for Real Ale (CAMRA) chairman Nik Antona said: “Bringing back the freeze in alcohol duty until August will avoid an additional inflationary new year price rise at the bar that drinkers and licensees could ill afford. CAMRA now looks forward to the new, lower rate of duty on draught beer and cider served in pubs and clubs coming into force in August 2023 to really help our locals compete with the likes of supermarket alcohol.”
Michael Kill of the Night Time Industries Association (NTIA) said: “We welcome the announcement today that Alcohol duty will be frozen until August by the Chancellor, but urge the Government to recognise the full extent of the problem, and consider further support in the coming months for many businesses to survive. The Alcohol duty freeze will give businesses some breathing space but will not repair the damage already done or solve the immediate challenges faced by the sector following three years of disruption.”
The decision marks the latest development in what has been a tumultuous few months in Westminster, and for the issue of alcohol duty.