Chancellor Rachel Reeves has today (26 November) announced that alcohol duty will increase with inflation, ignoring calls from the drinks industry to implement a freeze.
In the weeks and months leading up to the Budget, organisations including the UK Spirits Alliance (UKSA), the Scotch Whisky Association (SWA) and the Wine and Spirit Trade Association (WSTA) called on the chancellor to scrap planned duty hikes.
Today, however, Reeves announced an increase while also putting up the minimum wage for 18–20-year-olds from £10 to £10.85 per hour. Meanwhile, the living wage will rise from £12.21 to £12.71.
In positive news for businesses, Reeves announced that training for apprenticeships for under-25-year-olds would now be free for small and medium-sized enterprises.
The chancellor also said that there would be permanently lowered business rates for 750,000 retail, hospitality and leisure businesses. These will be paid for by higher rates on properties worth more than £500,000.
Responding immediately to the Budget, the SWA said the tax increase on alcohol will put additional pressure on an already suffering sector.
Mark Kent, CEO of the SWA, commented: “The Scotch Whisky industry is disappointed that the domestic tax burden has once again increased in the Autumn Budget, putting huge additional pressure on a sector suffering job losses, stalled investment and business closures.
“Put simply, the government cannot expect the Scotch whisky sector to just keep delivering growth, both at home and on the world stage, if the conditions which support growth are not nurtured.”
Turning to data, Kent continued: “The previous 3.65% increase to spirits duty has reduced spirits revenue by 7% – a loss to the Treasury of £150m. Hiking duty today, for the third time in two years, not only limits our sector’s ability to contribute to much needed economic growth and productivity, but will once again fail to deliver for the public purse and needlessly cost jobs.”
Echoing the statement from the SWA, the UKSA also expressed its dismay at the chancellor’s decision.
Karl Mason, UKSA spokesperson and director of Masons of Yorkshire, said: “This is a sad day for the nation’s distillers, pubs and the wider hospitality sector.
“Innovative, world-leading distillers are disappearing from communities. Three in ten landlords are scared that they will go bust within a year if costs increase; this Budget will push businesses on the brink over the edge.
“For all that pain, there’s no gain for the chancellor. Successive duty hikes have already cost the Treasury billions of pounds; this third increase will limit the ability for businesses to invest, grow and create much-needed jobs.”
The sentiment from the WSTA was the same. Miles Beale, CEO of the WSTA, said: “The government’s typically disappointing and shortsighted decision to raise alcohol duty yet again will only prolong the doom loop.
“Despite the OBR at last acknowledging higher prices lead to a decline in receipts, the government fails to recognise that its own policy is driving up those prices. Amazingly, the Treasury continues to press ahead with its ill-founded plan to pile further duty increases on alcohol.”
The Society of Independent Brewers and Associates (SIBA) described the Budget today as a “bitter blow for beer drinkers”.
It said: “Instead of supporting a sector already under immense pressure, the chancellor has chosen to increase beer duty on top of a raft of other tax rises. She had a real opportunity to build on last year’s progress by extending Draught Relief – a move that would have ensured beer sold in pubs carried a lower rate of duty – but she chose not to act.”
It praised the business rates reform as welcome “offering permanent relief for pubs and hospitality”. However, it said these “measures fall far short of addressing the escalating costs facing pubs and breweries up and down the country”.
The UK wine sector has also spoken against the Budget. Nicola Bates, CEO of WineGB, said: “The chancellor had the chance to help the UK wine sector, but there is nothing in the Budget that stimulates consumer demand and there is little to bring festive cheer. Another alcohol duty hike unfairly captures the domestic wine industry, putting rural jobs, tourism and growth at risk at a time when UK wine is gaining global recognition.”
Bates did however welcome the changes to apprenticeship costs. She said: “This will result in a boost for our sector, opening doors for young people to join the industry, driving more diverse and inclusive hiring and helping our businesses and the wider wine industry.”
