In a move hailed as a relief for the alcohol industry, Chancellor of the Exchequer Jeremy Hunt has announced a freeze on alcohol duty in the Autumn Statement. Hunt emphasized the Treasury's commitment to reducing taxes and alleviating the pressure of inflation, predicting a decrease to 2.8% by the end of the next year.
Background:
The decision to freeze alcohol duty comes after the implementation of the most significant change to duty in 50 years in August. This change, initially proposed by former Chancellor Rishi Sunak in 2021, faced continuous criticism from industry bodies and professionals who argued that the new system unfairly treated wine and spirits.
Industry Concerns and Lobbying:
Various drinks associations, including the Wine and Spirit Trade Association (WSTA), the Wine Society, and the Scotch Whisky Association (SWA), joined forces with major UK alcohol producers in lobbying efforts to persuade Hunt to reconsider. Analysis conducted by these groups indicated a potential loss of revenue for the Treasury due to decreased sales resulting from recent alcohol duty hikes.
Chancellor's Response:
Acknowledging the concerns raised by industry stakeholders, Hunt announced the freeze in alcohol duty until August of the following year. He specifically mentioned the efforts of the SWA and other organizations in lobbying for this decision, reflecting a responsiveness to the industry's economic challenges.
Industry Reactions:
Mark Kent, Chief Executive of the SWA, expressed gratitude for the certainty and stability provided by the Chancellor's decision, enabling the industry to focus on its core activities. He emphasized the need for ongoing discussions with the government to ensure a tax system that better reflects modern drinking trends.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, described the freeze as a "huge relief" for the sector, particularly following a decline in sales since the August duty changes. He urged the government to lock in the freeze until the end of the current Parliament to support businesses and consumers.
Producers' Perspectives:
Producers within the industry welcomed the news as a fillip, describing it as a positive development for an industry grappling with the aftermath of the August duty hike. Ed Baker of Kingsland Drinks expressed relief that the UK wine and spirits sector would not face further challenges due to additional excise increases.
Kathy Caton, Managing Director of Brighton Gin, highlighted the damaging effect of the August duty hike on sales, emphasizing the potential closures of distilleries in the absence of the duty freeze. Simon Doyle, General Manager at Concha y Toro Europe, praised the Chancellor's decision not to increase duty further, acknowledging the efforts of the industry to mitigate rising costs.
Conclusion:
The Chancellor's decision to freeze alcohol duty in the Autumn Statement has been met with widespread relief and appreciation from the alcohol industry. As the sector continues to navigate economic challenges, the freeze provides a crucial reprieve, allowing businesses to adapt to the changes already introduced in the current year. The collaborative efforts of industry associations and producers in lobbying for this freeze underscore the importance of ongoing dialogue between the government and the alcohol industry to address concerns and foster a supportive economic environment.
