Associations from across the sector have warned failure to act on alcohol duty could cause “irreversible damage” to the industry and called on the Chancellor to freeze or reduce the tax.
British Beer & Pub Association (BBPA) chief executive Emma McClarkin said: “At a time when many are struggling to stay open, no freeze or reduction in beer duty would send costs rocketing throughout pubs and breweries across the UK, causing irreversible damage to a sector that is already facing a massive squeeze in margins due to inflation and extortionate energy costs.”
McClarkin added businesses would be left with “no other option” but to hike prices at the bar, potentially “pricing people out of their local” and creating an “economic, social and cultural disaster”.
She added: “This Budget is a make-or-break moment for Britain’s pubs and breweries and we’re counting on Hunt to do everything he can to help keep their doors open for communities across the country.”
In addition, the Society for Independent Brewers (SIBA) chief executive Andy Slee called on the Chancellor to “stand up for beer drinkers” in today’s Budget ahead of the new duty regime due to come into force in August.
Long road to recovery
He added: “Without a freeze in alcohol duty in today’s Budget, brewers could be facing double digit increases by the summer at the same time as the Government brings in the biggest shakeup of the duty system in generations.
“This duty change comes as the sector continues to battle skyrocketing energy increases and a cost-of-living crisis with independent breweries still on the long road to recover from the Covid pandemic.”
Wine and spirits were also predicted to see costs soar, with some 90% of all still wine is set to see at least a 9% duty rise when the new duty regime comes into force, according to the Wine and Spirit Trade Association (WSTA).
However, if Hunt today announces the freeze to alcohol duty will also end on 1 August and increases duty in line with inflation, the wine tax hike could be at least double that, marking the biggest single increase in almost 50 years.
The spirits category, already the highest tax alcoholic drinks, also faces a 10% increase, adding a further 75p to a bottle of vodka, according to the WSTA.
WSTA chief executive Miles Beale said: “A two-pronged attack on wine drinkers by adding an inflationary duty increase on top of the stealth tax already applied when the Government’s new alcohol duty regime kicks in this summer, will see duty alone add 44p to a bottle of still wine.
“If alcohol duty rates went up by RPI, this would be a crippling blow to the UK alcohol industry and consumers who will have to pay the price for tax rises during a cost-of-living crisis.”
Ahead of today’s Budget, the WSTA sent a Budget submission to the Chancellor calling for no change to the proposed rates as well as an extension of the small producer scheme to include wine and spirits.
Beale added: “We urge the Chancellor to continue to look at ways to reduce burden on businesses, in particular through continued business rates relief and by introducing a cut to Corporation Tax.”