Increase in alcohol duty 'will cripple hospitality' claims industry body

The increases to a number of drinks, set out in the Spring Budget, are set to come into force on Tuesday.

The new method will measure the alcohol content in a drink, and some products that previously had a low duty rate will see greater increases.

The Treasury said the historic duty changes mean that the duty paid on drinks on tap in pubs will be up to 11p lower than at the supermarket, and described the changes as designed to help pubs compete on a level playing field with supermarkets.

Colin Neill, chief executive, Hospitality Ulster said businesses are already under pressure in terms of inflation, rates, National Insurance contributions and insurance.

He said they will be forced to raise the prices they charge for alcohol.

"The immediate future remains challenging, and it is vital that we ensure our valued customers understand the price increases are down to the Government - not hospitality businesses," he said.

"This has left hospitality businesses, who are fighting to break even, no choice but to pass on the significant duty increases to customers.

"This is heaping misery on customers and will damage hospitality businesses at the same time."

He said taking into account overheads for labour and bills, a publican is likely to be making around 50p on a pint.

"That's just not sustainable at a time when costs are rising all around us," he said.

"The hospitality sector is one of the highest taxed and undervalued sectors in the UK, but we will continue to work in partnership with UK Hospitality to press the British Government to recognise the importance of the industry."

First set out by then chancellor Rishi Sunak in 2021, the new system aims to encourage consumers to cut back by taxing all alcohol based on its strength, rather than the previous categories of wine, beer, spirits, and ciders.Mr Sunak described the overhaul as “the most radical simplification of alcohol duties for over 140 years”, enabled by Britain's exit from the EU.

At March's Budget, Chancellor Jeremy Hunt also announced that the freeze to alcohol duty would end on August 1 and increase by inflation, at 10.1%.The increase will see duty rise by 44p on a bottle of wine, which when combined with VAT will mean consumers will pay an extra 53p, according to the Wine and Spirit Trade Association (WSTA).Duty on 18% cream sherry will go up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle, while a bottle of port will go up by more than £1.50.

The total tax on a bottle of gin or vodka will go up by around 90p.WSTA chief executive Miles Beale said: “We are careering towards an extremely tough period for wine and spirit businesses with tax hikes and other costs, including a prolonged cost-of-living crisis for their consumers, persistently high inflation, especially for food and drink, and rocketing prices for glass, leaving little room for many businesses to turn a profit. Inevitably some won't be able to stay afloat, with SMEs most at risk.

“Amongst all this pressure the government has chosen to impose more inflationary misery on consumers on August 1, with the biggest single alcohol duty increase in almost 50 years.“Ultimately, the government's new duty regime discriminates against premium spirits and wine more than other products.“Wine from hotter countries, like new trade deal partner Australia, will be penalised most of all, because the grapes grown in hotter climates naturally produce higher alcohol wines.“And, at the same time, you cannot reduce alcohol in wine like you can for some other products.

“Making wine isn't an industrial process; reducing wine's alcoholic content is limited, changes the product and is costly to carry out. Nor can the alcohol in full strength spirits be reduced for products such as gin, vodka and whisky where a minimum strength prescribed by law.“In the end the Sunak-Hunt changes to wine duty will reduce consumer choice and push up prices.

“For spirits you can expect at least a £1 increase on a bottle of gin or vodka and a leap of £1 per bottle of wine when duty is increased by 20% (plus VAT).”The chancellor is cutting the duty charged on draught pints across the UK by 11p in August in a major boost for pubs and draught beer drinkers.

However, the British Beer and Pub Association (BBPA) said brewers will pay 10.1% more tax on bottles and cans of beer from today, meaning tax will make up around 30% of the cost of a 500ml bottle.Despite the draught freeze, the BBPA said the tax increase on packaged beer will add an extra £225 million of costs per year across the industry.