Alcohol duty freeze brings holiday cheer to drinks industry
In a statement to the House of Commons, Exchequer Secretary to the Treasury James Cartlidge said the duty rates decision would be held back until the Chancellor Jeremy Hunt delivers his Spring Budget on 15 March 2023.
He also made clear that any changes to duty announced then would not take effect until 1 August 2023, to align with the date ‘historic reforms’ for the alcohol duty system come in and amounts to an effective six-month extension to the current duty freeze.
Miles Beale, chief executive of the Wine and Spirit Trade Association, 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.
Increasing revenue
“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.”
Beale said delaying any increase to 1 August meant businesses would not have to manage two duty rises in the space of six months. He hoped that any duty increases applied in August took into account the damage caused by the COVID-19 pandemic on the wine and spirit business.
“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,” Beale added.
Diageo GB managing director Nuno Teles also welcomed the Chancellor’s decision to freeze the alcohol duty until August next year.
Christmas present
“The decision by the Chancellor to freeze alcohol duty until August will come as a much-needed Christmas present for hard pressed pubs, bars and restaurants up and down the country. Today’s news provides much needed certainty for the sector and we raise a glass of Guinness to the Chancellor and the PM in thanks. Cheers, Chancellor!”
Emma McClarkin, chief executive of the British Beer and Pub Association, highlighted the potential funding that could be reinvested into the industry now the pressure of a looming duty increase had eased off.
“This freeze will allow £180m to be reinvested into our sector at a critical moment and inject a much-needed flurry of festive cheer for pubs and breweries,” said McClarkin. “It shows the Government understands just how much our pubs and brewers mean to communities across the UK.
“Investment in our sector now will pay dividends in villages, towns and cities across the country for generations to come. Pubs and brewers are a crucial thread in the social fabric of our society and contribute not only economically but socially, connecting people in communities up and down the country.”
Challenging times
Scotch Whisky Association chief executive Mark Kent also welcomed the announcement following a challenging period for the industry.
“HM Treasury recognises the turbulent time being faced by the hospitality sector, businesses, and households with rising costs,” he said. “The duty freeze, which has previously boosted industry investment and government revenue, is a win-win and gives distillers cause for Christmas cheer.
“We want to thank the Chancellor for listening to the industry and hope that when he makes a decision on future alcohol duty at the Spring Budget, he ensures it supports Scotch Whisky, and the hundreds of millions of [pounds of] investment and tens of thousands of jobs the industry supports across the UK.”
