Chancellor Jeremy Hunt said on Wednesday the government would freeze all alcohol duty until August 2024.
“I have decided to freeze all alcohol duty until August 1st next year. That means no increase in duty on beer, cider, wine or spirits,” Hunt told parliament in his budget update.
The Wine and Spirit Trade Association (WSTA) has welcomed the move, saying it comes as “a huge relief” to a sector that has “taken a battering”.
British businesses were bracing themselves for a second duty increase at the Autumn Statement which would have come as a punishing blow hot on the heels of the government’s new alcohol duty regime – brought in on August 1 – which introduced the largest alcohol tax rise for almost 50 years.
The WSTA said it has been able to provide compelling evidence that a tax freeze would bolster British businesses and at the same time benefit Treasury coffers.
The chancellor’s decision to freeze excise duty comes at a time when wine and spirits have seen a nearly triple digit increase in inflation in the last three months. The sector is also experiencing dramatically increased supply chain costs and huge increase in the glass recycling fees.
The WSTA has called on the government to lock in the freeze, for the rest of this Parliament, to support businesses and help prevent rocketing prices for cash strapped consumers.
“The alcohol duty freeze comes as a huge relief to wine and spirit businesses and the hospitality sector who have taken a battering over the last few years. We are extremely relieved that the government – and exchequer secretary, Gareth Davies in particular – has listened to our pleas not to hit wine and spirit businesses and consumers with another painful duty increase,” Miles Beale, chief executive of the WSTA, said.
“We are pleased that the frustrations of consumers, who are fed up with never ending price rises, and of businesses struggling with the cost and complexities of the new system have been heeded. These are ongoing concerns about the impact of the new regime, which need to be kept under review. We implore the chancellor and his team to lock in the freeze until at least the end of this Parliament. This will keep people in jobs and mean consumers will still be able to enjoy a drink at a price they can afford.”
Commenting on the decision, Nuno Teles, managing director, Diageo GB, said: “Today we raise a glass to the chancellor and the prime minister, who have listened to the industry’s plea for support and decided to back our homegrown sector, that employs so many people across the UK. Drinkers and pub-goers across the country now have even more reason to celebrate this festive season. Cheers Chancellor!”
Ed Baker, managing director of Kingsland Drinks, added: “At Kingsland Drinks, we are relieved that the chancellor has decided to not hamstring the UK wine and spirits sector further by a further Excise increase. The August 1st increases are making the UK consumer pay some of the highest alcohol taxes in Europe which are now filtering through to higher pricing for them and lower sales for us; an additional rise would have damaged our industry even further.”
Simon Doyle, general manager at Concha y Toro Europe, said: “In response to the chancellor’s request to manage inflation, our industry has worked tirelessly to mitigate genuine material, transport, legislative and service charge cost increases to keep wine prices as affordable as possible. As a result of this hard work, the average price of wine has only risen by the 21 per cent increase in excise duty levied by the chancellor himself on 1st August.
“It is therefore a relief that the Chancellor has decided not to increase duty any further in his Autumn statement. We are grateful for this and the tireless efforts of the WSTA in representing the challenges that our industry faces to the Treasury.”