The Chancellor’s announcement of a freeze on beer duty in pubs has been welcomed by the sector, with a typical pint in a pub to cost 11p less in tax than its equivalent from a supermarket from 1 August.
However, when the new alcohol duty regime comes into force on 1 August, 90% of all still wine is set to see at least a 9% duty rise.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: “This Budget was a make or break moment for pubs and brewers who have been running out of road for too long, and whilst the Chancellor’s efforts to support our pubs and breweries are welcome, we look forward to seeing how the “Brexit Pubs Guarantee” will deliver for our sector.
“The cut to draught duty as part of the alcohol duty reform is positive and we hope that it will result in a boost for our pubs this summer.
“However, the fact is, our industry will be facing an overall tax hike not a reduction come August. Duty on non-draught beer will rise and the measures introduced today won’t rebalance the catastrophic impact soaring inflation and unfair energy contracts are having on both pubs and the breweries that supply them.
“As the 1st of April rapidly approaches, businesses are also nervously awaiting what’s next for their energy costs, and a lack of support in today’s announcement will have a direct impact on their ability to keep their lights on and doors open.
“We need the Chancellor to unlock growth opportunities for businesses of all shapes and sizes. We look forward to seeing how his measures on investment, people and skills will lay the foundations to allow our pubs and breweries to continue to create jobs and help regenerate local economies in every part of the country.
“The Chancellor highlighted how our pubs are the most treasured community institution, and we appreciate his efforts to provide some relief, but a lack of immediate support in today’s Budget will still put the future of many of them at risk.
“Having recognised the importance of our pubs and brewers, we look forward to working with the Government to resolve the fundamental issues holding our pubs and breweries back, including reforming business rates and reducing the unfair tax burden on our sector.
“It is still tough out there for our pubs and breweries and so we’re encouraging people to get out and support their much-loved locals.”
Steve Alton, CEO, British Institute of Innkeeping, commented: “Many of our members had no choice but to take unfair and untenable energy contracts, when prices were at their highest from last summer, and the impact of this combined with wider inflation and wary consumers with less disposable income, has left their businesses fragile and facing an uncertain future.
“Without further support from Government, Ofgem must now step in urgently to tackle the energy suppliers holding our sector hostage with sky high standing charges and energy prices that will in many cases be 3 to 4 times that of 2021 rates. Forcing suppliers to allow businesses to recontract at the much lower rates now being seen in the market needs to be prioritised, as without it, many otherwise viable pubs will be forced to close.
“The freeze on duty rates in the short term, and the increase on Draught Relief from 5% to 9.2% in the summer will be welcome, if felt directly by pubs. In addition however, the actual impact will depend heavily on the RPI rise that will be applied alongside this relief from 1st August 2023.
“The positive steps taken by Government to support families with enhanced childcare support, a freeze on fuel duty and other measures, may provide some confidence to allow consumer spending to rise, but for the immediate future, pubs will be facing significant trading challenges.
“Our pubs provide accessible, skilled jobs in every community and will be key to providing flexible opportunities in every area of the UK, aligning with the Government’s policies on getting people back into meaningful employment. They can only do this if they are supported to thrive as local businesses and this Budget has absolutely missed the opportunity to help pubs struggling to cope with a perfect storm of challenges.
“Outside of the immediate issues our members are facing, we will continue to make the case for a full overhaul of the outdated and unfair tax system that affects our pubs, specifically VAT and longer term Business Rate reform.”
Wine and spirit duty
Wine drinkers have been hit by the single biggest duty hike since 1975, with the Wine and Spirit Trade Association saying it is “deeply disappointed that the Chancellor has chosen to stifle British business and punish the UK’s cash-strapped consumers by significantly increasing wine and spirit duty.”
The freeze to alcohol duty will also end on 1 August, with duty increasing by inflation – at 10.1% RPI – and wine drinkers to face a 20% tax.
This tax rise will mean that duty on a bottle of still wine will go up by 44p. For fortified wines the duty rises will be greater, with port set to rise by £1.30 a bottle and a bottle of vodka goes up by 76p.
Miles Beale, CEO of the Wine and Spirit Trade Association, said: “The Government’s decision to punish wine and spirit businesses and consumers with a 10% duty hike for spirits and a massive 20% for wine, from 1 August, is staggering. It is the largest increase in wine duty since 1975.
“This Budget directly contradicts what this Government claims it is trying to tackle. It will further fuel inflation. It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic.
“The double whammy tax hike for wine is a particularly bitter blow for the UKs SME-rich wine businesses. It begs the question - yet again - what does Government have against people who choose to produce and drink wine?
“These crippling inflationary tax hikes will be lumped on top of stealth tax rises for some alcoholic products, which the Government has built into the move to taxing alcohol by strength.
After all the effort to relaunch hospitality supply chains in 2022, the Government is offering no help in 2023 for the wine and spirit trade - and particularly for the UK’s 33 million wine drinkers who will see their – and the nation’s - favourite drink hit with a 44p duty rise in the midst of a cost-of-living crisis.”
