Budget 2017

Drinks industry slams Spring Budget

By James Ridler contact

- Last updated on GMT

Chancellor Philip Hammond’s budget is a ‘major blow’ to the drinks industry. Image: Flickr user See Li
Chancellor Philip Hammond’s budget is a ‘major blow’ to the drinks industry. Image: Flickr user See Li
The 2017 Spring Budget is as a “major blow” to the UK drinks industry, as tax on alcoholic beverages is to increase to the highest levels in Europe, warn industry representatives.

The Budget – delivered today by Chancellor Philip Hammond (Wednesday March 8) – set out rises in duty on beer, cider, wine and spirits in line with retail price index inflation.

The increases will see an extra 2p duty on a pint of beer and an extra 36p added to the price of a bottle of Scotch whisky – an increase of 4%.

The Scotch Whisky Association (SWA) said the hike in duties undermined the competitiveness of the industry, at a time when the government should be supporting UK exporters.

SWA acting chief executive Julie Hesketh-Laird called the increase in tax a burden on the industry and a major blow.

‘Penalising an important British industry’

“Distillers will find it hard to understand why the chancellor is penalising a strategically important British industry with this tax increase,” ​she said.

“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. The system is in need of a fundamental review and reform to make it fair and competitive.”

The Campaign for Real Ale (CAMRA) echoed Hesketh Laird’s sentiments. UK brewers had been let down by the chancellor’s decision to increase beer duty for the first time in five years, it said.

CAMRA national chairman Colin Valentine compared the rise in tax to the escalation of beer duty between 2008 to 2013, which led to thousands of jobs being lost and a 24% fall in beer sales in pubs.

“The government’s u-turn on beer duty is a real missed opportunity to support consumers,” ​said Valentine. “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.”

‘Unsustainable price increases’

“Further beer duty increases will lead to unsustainable price increases in pubs. The decision completely ignores the pressures that are being faced by the beer and pub sectors.”

British Beer and Pub Association chief executive Brigid Simmonds forecast 4,000 job cuts in light of tax rises on alcohol, on top of pressures for the industry brought on by the national living and minimum wage, and the Apprenticeship Levy.

“Britain’s beer taxes are three times the EU average, and an astonishing 13 times higher than those of the largest producer, Germany,” ​she said.

“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.”

Carlsberg UK corporate affairs director Bruce Ray said the rise in beer tax was disappointing and damaging to producers and consumers.

“Last year’s freeze in beer tax supported investment into the growth and innovation in pubs and breweries – demonstrating the crucial social and economic contribution that our industry makes to the UK. This increase simply risks undoing that good work,​he said.

“This year’s increase will be very damaging to an industry which routinely innovates, creates new jobs, and ultimately supports our beer-loving nation.”

Related topics: Business News, Beverages

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