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UK alcohol industry welcomes "much-needed certainty" on duty freeze

6th Mar 2024 13:45

(Alliance News) - The alcohol industry in the UK on Wednesday welcomed the extension of the alcohol duty freeze as "some much-needed certainty and stability" for the industry and consumers alike.

Chancellor Jeremy Hunt, who announced a freeze in the autumn statement until August this year, said it would have been due to rise by 3% without today's extension to February of next year.

He said: "But I have listened carefully to my Right Honourable Friends for Altrincham and Sale West, the Vale of Glamorgan and my Right Honourable Friend from Moray who is a formidable champion of the Scottish Whisky industry.

"I also listened to councillor John Tonks, a strong supporter of the wonderful Admiral pub in Ash, who pointed out the pressures facing the industry. So today I have decided to extend the alcohol duty freeze until February 2025.

"This benefits 38,000 pubs all across the UK – and on top of the GBP13,000 saving a typical pub will get from the 75% business rates discount I announced in the autumn.

"We value our hospitality industry and we are backing the great British pub."

Stephen Russell, founder of Copper Rivet Distillery and spokesman for the UK Spirits Alliance, said: "The chancellor has raised the spirits of distillers, hospitality businesses and consumers alike.

"Maintaining the freeze announced in the autumn is good news for spirits drinkers, good news for pubs and bars and the wider economy, and good news for the Treasury as it will enhance revenue for the Exchequer.

"Spirits continue to be the highest taxed alcohol category in the UK – most people are shocked to hear that 80% of a bottle of gin is tax. We have the highest spirits duty rate among G7 nations, despite being a national success story.

"We look forward to engaging with HM Treasury on how we improve this."

Scotch Whisky Association Chief Executive Mark Kent said: "The industry welcomes the Chancellor's recognition of the benefits of continuing the duty freezes beyond August this year.

"That decision supports the Scotch whisky industry, will incentivise investment and, as with previous cuts and freezes, boost Treasury revenue.

"With cost pressures hurting our bars and pubs, not to mention hard-pressed consumers, the Treasury has provided some much-needed certainty and stability for the year ahead."

But he added: "Despite this freeze, Scotch whisky is still put at a disadvantage by the duty system, based on a fundamental misunderstanding of how people consume alcohol and modern drinking trends.

"With today's freeze cider is still taxed four times less than a spirit like Scotch whisky and responsible consumers who enjoy a Scotch are paying too much tax compared with a beer or cider."

Miles Beale, chief executive of the Wine & Spirit Trade Association, said: "The wine and spirit sector will be relieved that the chancellor has spared them a further duty hike. This will help to keep price rises down for consumers for a period.

"Six months ago, alcohol duty was subjected to the largest increase in almost 50 years. Those tax increases fuelled inflation and had a negative impact on sales, which in turn has seen Treasury lose around GBP600 million in alcohol revenue.

"We are pleased that government has now recognised that duty hikes are bad for businesses, bad for consumers and bad for the Exchequer."

Beale also added: "However, the benefits of a freeze will be short-lived for wine businesses who are fuming after confirmation that costly and fiendishly complex new taxation rules will come into force from February 1 2025.

"The changes to taxing wine have been described as 'unadministrable' and 'sheer lunacy' by our members.

"Scrapping the easement for wine duty will see price increases for 75% of red wines sold in UK. The chancellor and his Treasury colleagues should have listened to businesses and kept in place the sensible, simplified procedure for taxing wine. It's going to be a very costly mistake."

However, health campaigners condemned the "appalling" decision at a time of "record high" alcohol-related deaths.

Ian Gilmore, chair of the Alcohol Health Alliance UK, said: "Increasing alcohol duty is one of the most effective ways to increase Treasury revenue, reduce alcohol harm and protect the NHS.

"It is appalling that once again the chancellor has passed on the opportunity to boost government spending and improve public health, in favour of a tax break for the multibillion-pound alcohol industry.

"At a time when we are experiencing record-high alcohol deaths and public finances are under extreme pressure, increasing duty is fundamental in reducing the burden caused by alcohol.

"The tax cut afforded to the alcohol industry today is the result of lobbying from powerful multinational corporations. It further highlights the need for an automatic duty escalator to be reinstated to protect the decision from the influence of industry each year."

On the London Stock Exchange, FTSE 100-listed whisky maker Diageo PLC was down 0.9% to 2,896.00. However, more domestic-oriented companies, such as pub chains, were higher. Mitchells & Butlers PLC was up 3.3%, JD Wetherspoon PLC up 2.0% and Marston's PLC up 1.7%.

By Josie Clarke, PA Consumer Affairs Correspondent

source: PA

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