Chancellor's alcohol duty freeze U-turn "extremely disappointing"
The trade has reacted to news that new chancellor Jeremy Hunt will now reverse plans to freeze duty on alcohol, less than a month after former chancellor Kwasi Kwarteng made the announcement.
In late September, Kwarteng said: “At this difficult time, we are not going to let alcohol duty rates rise in line with RPI.
“I can announce that the planned increases in the duty rates for beer, for cider, for wine, and for spirits will all be cancelled.”
However, Hunt today announced a reversal of almost all of the tax measures set out in the Growth Plan that have not been legislated for in parliament. This includes freezing alcohol duty rates from February 1, 2023, for a year.
“Not proceeding with the freeze is worth approximately £600 million a year,” the chancellor said in a statement. “The next steps of the Alcohol Duty Review announced in Growth Plan 2022 will continue as planned. The alcohol duty uprating decision and interactions with the wider reforms to alcohol duties under the Alcohol Duty Review will be considered in due course.”
Miles Beale, chief executive of the Wine and Spirit Trade Association called the announcement “extremely disappointing”.
“This is yet another change of plans which will cause disruption to UK wine and spirit businesses who have spent the last two years being bounced from one crisis to the next.
“Raising taxes is not only bad news for consumers worried about the cost of living, but also stifles growth and innovation for British businesses trying to recover from the pandemic and supply chain issues. History has shown that freezing alcohol duty does not have a negative impact on Treasury coffers.
“We are looking forward to discussing our concerns with Treasury officials.”
Society of Independent Brewers national chairman Roy Allkin said today’s announcement “undoes many of the positive measures announced in the mini budget only a few weeks ago”.
“Small independent brewers will now have to wait a further few weeks to understand what this means for them, as the shakeup of the overarching alcohol duty system is still expected to go ahead. Again, this is creating more uncertainty for small brewers who are facing an extremely challenging trading environment dominated by energy spikes, price increases and a cost-of-living crisis.”
Allkin also highlighted intentions by the Treasury to conduct a review of energy support from next April, including incentivising energy efficiency.
“Small brewers previously called for support through grants to move to Net Zero and improve their energy efficiency through new technology and we hope that the Chancellor will consider this as part of his review," he said.
Emma McClarkin, chief executive of the British Beer and Pub Association called the U-turn a “huge blow” for brewers and pubs. “The cost of doing business is completely out of control for pubs and brewers and the failure to act today to reduce pressures on businesses will hit them extremely hard,” she added.