Alcohol duty rise ‘sad day’ for distillers, pubs and hospitality sector

The Chancellor’s decision to raise alcohol duty in line with inflation has been called a “sad day” for the nation’s distillers, pubs and wider hospitality sector.

Alcohol duty normally rises in line with the Retail Price Index from September – which was 4.5%.

Industry leaders had urged the Government to freeze duty in this year’s Budget, arguing members were still reeling from the tax hikes introduced in February, and the additional burden of the new glass tax.

Alcohol prices are up 5.8% on last year, according to official figures.

Last year, drinkers faced a 3.6% hike to alcohol duty, adding 54p to a bottle of wine and gin by 32p – while draught duty was cut by 1.7% – or a penny off a pint – in the 2024 Budget.

Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA) said: “This Budget has been dubbed a death by a thousand cuts, and for wine and spirit businesses those cuts run deep.

“Our members are still reeling from the tax hikes introduced in February, and the additional burden of the costly new glass tax, known as EPR. Coupled with rises in National Insurance, increases to the minimum wage and business rates, it is no surprise that wine and spirit producers – along with our beleaguered hospitality sector – feel under sustained attack.

“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.

“Prices will rise once more for consumers, British businesses will suffer, and Treasury receipts will continue to fall – forecast to be £600 million lower than last year and £1 billion lower than was forecast in March.”

UK Spirits Alliance spokesman Karl Mason 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.

“Today’s decision will also be felt in the pockets of the working people that this Government says it wants to support. We will continue to make our case to the Government as it looks to review excise duty next year.”

However the Alcohol Health Alliance (AHA) welcomed the Chancellor’s decision.

AHA chairman Professor Sir Ian Gilmore said: “The decision to allow alcohol duty to keep pace with inflation in today’s Autumn Budget marks a welcome shift towards a more responsible approach to alcohol taxation.

“It signals recognition that maintaining alcohol duty in real terms is an important step towards bringing back an annual duty escalator at 2% plus RPI. We know that this is not only fair, but necessary, to save lives, reduce harm and protect the health of the nation.

“While parts of the alcohol industry may seek to portray this as a significant increase or a punitive measure, this is simply a return to the long-established principle that duty should rise in line with inflation, just as it does for other goods and services.

“Years of cuts and freezes by previous governments have eroded the public health benefits of this system and have created an expectation that alcohol should be treated differently.”