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Ministers have frozen alcohol duty until next summer in a bid to encourage patrons to spend in Britain’s pubs, which have been facing closures because of rising costs.
Rates on alcohol duty on beer, cider, wine and spirits would be held steady until next August at a cost of £310mn in lost tax income, chancellor Jeremy Hunt announced on Wednesday as part of his Autumn Statement.
Hunt told MPs that he had “listened to defenders of the great British pint” and decided to freeze the tax, in a move that would stop a further 3p rise in the duty cost of an average pint of beer.
“This is now one less additional cost venues have to worry about,” said Kate Nicholls, chief executive of trade body UKHospitality.
David McDowall, chief executive of Stonegate, the UK’s biggest pub group, welcomed the freeze, saying the move would “provide some respite and comfort to the hospitality sector”.
The sector had battled against a “triple threat” of soaring energy costs, rampant inflation and cost of living pressures over the past year, McDowall added.
However, smaller, independent pub operators warned that the depressing effect on profits of increased minimum wages might outweigh the combined effect of the alcohol duty freeze and the extension of 75 per cent business rates relief for single-site operators.
Minimum wage rises would “hugely impact” the profitability of venues, said Steven Alton, chief executive of the British Institute of Innkeeping, an industry body representing independent pubs.
“While we welcome measures that protect workers, there must be recognition of the impact this mandated increase will have on our small pub businesses,” Alton added.
High inflation and fears over an economic slowdown have deterred customers and led to a wave of pub closures. A total of 383 pubs shut in the first six months of the year, according to real estate adviser Altus Group. The figure nearly matched the total for the whole of 2022. In September, the number of licensed premises across the UK dipped below 100,000 for the first time, according to UKHospitality.
The government said it had extended the freeze to give businesses time to adapt to a new alcohol duty regime, which was introduced in August this year.
An inflation-linked rise in alcohol duty during March’s budget was largely offset for draught beer and cider by an increase in draught relief, for drinks served in pubs. However, duty on bottled wines and spirits rose steeply.
The Wine and Spirit Trade Association said the alcohol duty freeze came as a “huge relief” to drink makers which had “taken a battering” over the past few years. Miles Beale, the WSTA’s chief executive, said the latest sales data showed “worrying” declines following the introduction of the higher duty rates for still wines and spirits.
Wines and spirits had experienced soaring supply chain costs and glass recycling fees, the trade body said.
According to Office for National Statistics data for September, the average price of a bottle of gin was up 14 per cent compared with a year earlier, while fortified wines such as port were up by 17 per cent.
The chancellor also announced a 10 per cent hike on duty on hand-rolling tobacco.
Source: Economy - ft.com
