Drinks firms and industry bodies have hit back at the UK Government after Chancellor Phillip Hammond announced an increase in duty rates on beer, cider, wine and spirits in today’s Budget.
According to several trade bodies, the inflationary increase will add around 2p of duty to the price of a pint, 8p to an average-sized bottle of wine, 28p to a bottle of vodka and 36p to a bottle of whisky.
Dire consequences
A number of trade bodies have warned this spells bad news for the industry, including The British Beer & Pub Association (BBPA), which has actively campaigned against a rise in beer duty.
Reacting to the Budget announcement, BBPA CEO Brigid Simmonds said, “When it comes to beer duty, a return to unpopular beer duty rises, with an extra 2p duty on a pint, is not good news for the British beer industry and in turn pubs.
“Business Rates, auto-enrolment of pensions, the national living and minimum wage, and the Apprenticeship Levy were already adding the equivalent of 5.3p in beer duty.
“Beer tax has now risen by 43% the past ten years. This latest rise will mean 4,000 fewer jobs this year, mostly in pubs. Tax rises on all alcohol will add £125m to the cost base of pubs.”
UK paying one of highest duty rates in Europe
Simmonds added that Britain’s beer taxes are now three times the EU average, and 13 times higher than those of the largest producer, Germany.
She continued, “If we are to compete in the future and as we move towards the challenges of Brexit, action must be taken on tax, to ease the burden on a beer and pub industry that supports around 900,000 UK jobs.”
Colin Valentine, national chairman of the Campaign for Real Ale (CAMRA), was equally disappointed with today’s announcement, which marked the first increase in beer duty in the UK for five years.
He said beer drinkers, pubs and brewers have been “let down by the chancellor’s decision to increase beer duty” and that the decision “completely ignores the pressures that are being faced by the beer and pub sectors.”
Valentine warned that “the rise in beer duty will ultimately hit consumers in their pockets and lead to pub closures across the country.”
He added, “The UK still pays one of the highest rates of duty across Europe, only consuming around 12% of the beer yet paying nearly 40% of all beer duty in the EU. Further beer duty increases will lead to unsustainable price increases in pubs.”
“Incredibly disappointing”
Dougal Sharp, founder & master brewer of Innis & Gunn, the UK’s second-biggest independent craft brewer, also voiced his disappointment.
Sharp said, “We welcomed the freeze in beer duty last year and we were hoping for a similar positive incentive from the Chancellor this time around.
“It is incredibly disappointing to see an increase in alcohol duty in the latest budget, consumers are going to be hit hardest by this rise and I fear for the impact it will have on pubs already facing enormous pressures.
“We’re in the middle of a beer boom in Scotland, with over 100 active breweries for the first time in over a century, and the government should be doing all that it can to support our industry.”
Excise duty increase on spirits a ‘major blow’
The Chancellor’s decision to increase excise duty on spirits by nearly 4% has also been described as a ‘major blow’ to the UK drinks industry.
The Wine and Spirit Trade Association (WSTA) reports the Budget will see 8p of duty added to a 75cl bottle of wine, 28p added to a 70cl bottle of 37.5% ABV vodka and 30p added to a 70cl bottle of 40% ABV gin.
The Scotch Whisky Association (SWA) added that the duty rise will add 36p to an average priced bottle of Scotch.
It has calculated that the overall tax on an average bottle of Scotch (excise duty and VAT) will comprise 79% of the total cost – 21% higher than in 2010, and that excise duty on a 70cl bottle will increase to £8.05, while the total tax will rise to £10.20.
Julie Hesketh-Laird, acting chief executive of the SWA, said, “A nearly 4% duty rise and a 79% tax burden on a bottle of whisky is a major blow, reversing recent progress.
“Distillers will find it hard to understand why the Chancellor is penalising a strategically important British industry with this tax increase.
“At a time when government should be supporting a key home-grown sector, we face a damaging tax rise on top of the uncertainties of Brexit.”
Calls for “fundamental review and reform” of alcohol duty system
Hesketh-Laird added, “Looking to the autumn Budget, we will be arguing strongly that it is time for a new approach to excise duty outside the constraints of EU excise law.
“The system is in need of a fundamental review and reform to make it fair and competitive.”
Charles Ireland, Managing Director, Diageo Great Britain agreed, adding, “It is staggering that the Prime Minister stood up in Scotland only on Friday and said that Scotch Whisky is “a truly great Scottish and British industry… and directly supports tens of thousands of jobs”, and just five days later her Chancellor hammers this industry at home.”
He added, “Tax on Scotch Whisky is now so high – nearly 80% of the price of an average bottle will go straight to the Government. We believe this duty rate increase will reduce total tax revenue.
“We are calling on the Government to reverse this punitive tax hike and fundamentally overhaul what is clearly a flawed excise duty system.”
