Budget: Alcohol duty freeze hailed as "vital lifeline" for UK drinks sector

The Wine and Spirit Trade Association has welcomed the Chancellor’s decision to listen to British business and UK consumers by freezing wine and spirit duty.

The announcement comes after a WSTA campaign called on the Chancellor to support the wine and spirit industry after the pandemic led to the “crushing, continuing closure” of the hospitality sector.

A freeze will allow businesses to “recover, rebuild, create jobs and - in time – replenish revenues to the Treasury” and will keep prices down for cash-strapped consumers.

The decision by Rishi Sunak MP to freeze alcohol duty will be welcome news for the UK wine and spirit industry, which not only has to deal with the chaos created by Covid-19 but is also navigating a new trading landscape post Brexit.

The WSTA said the freeze is a vital lifeline which will “help our talented SME British distillers and English wine makers to invest and grow”, as well as help save jobs in the UK’s huge wine importing and exporting industry.

Miles Beale Chief Executive of the Wine & Spirit Trade Association, said: “The decision to freeze wine and spirit duty comes as a huge relief for British businesses, pubs, restaurants and its suppliers following the crushing – and continuing - closure of the hospitality sector, for months on end, during the pandemic.

“Chancellor Rishi Sunak seems to “get it”. He understands that supporting our industry will allow it to recover, rebuild, create jobs and - in time – replenish revenues to the Treasury. 

“He has also shown he is in touch with men and women from all walks of life who want to enjoy their chosen tipple without getting stung by further tax hikes.

“We will all raise a glass to the Chancellor tonight – and look forward to more permanent support for the sector following the review of alcohol taxation.”

Recent HMRC figures show the number of distilleries registered in 2020 shot up to more than 560 as the UK boosted its distillery numbers by a record breaking 124 last year, doubling the number of UK distilleries in four years.

The UK spirit industry is worth around £11 billion in economic activity and supports some 230,000 jobs.

The UK wine industry brings in around £11 billion to the UK economy and supports some 130,000 jobs. As well as the UK being the home of some of the world’s biggest bottling plants it also has a thriving English and Welsh wine industry which now boasts 763 vineyards in the UK and 164 wineries.

The measures taken by the Chancellor today means a saving in duty payments of £100 million for wine and spirit businesses. This is the amount saved based on the assumption that Government was set to carry out plans to increase excise duty by inflation at 1.4% RPI.*

  • · Duty on a 750ml bottle of wine remains at £2.23
  • · Duty on a 750ml bottle of sparkling remains at £2.86
  • · Duty on a 750ml bottle of fortified wine remains at £2.98
  • · Duty on a 70cl bottle of vodka at 37.5% remains at £7.54
  • · Duty on a 70cl bottle of gin at 40% remains at £8.05

Dayalan Nayager, managing director, Diageo Great Britain, said: "We thank the Chancellor for providing much-needed stability by freezing alcohol duty. The last year has been incredibly tough and today’s decision, along with other measures to help the trade, gives the industry confidence to meet the ongoing challenges in these critical last months before reopening.

"Commitments such as Diageo’s £30million, to help pubs and bars operate safely through our Raising the Bar, will give even further assurance. We now look ahead to the Alcohol Duty Review and welcome the opportunity to work with Government to bring greater fairness to the duty system and spirits producers across the UK.”

Also announced today, the Government has given a further extension to the VAT cut for the hospitality sector, but this does not include alcohol.

Beale said: "We also welcome the extension to the VAT cut for the hospitality sector, but it is disappointing that the Chancellor did not extend this to include alcoholic drinks, which would have given the trade a real boost when they are finally allowed to re-open their doors to the public.”

Sunak also revealed that the 100% business rates relief will be extended for the three months to the end of June, with a susequent two-third discount applying until the end of the 2021/ 22 financial year.

James Lowman, chief executive of the Association of Convenience Stores, said: “We strongly welcome the short-term measures that the Chancellor has announced to avoid a sudden shock in business rates increases for local shops. The upcoming review of business rates will be crucial in shaping our economic recovery from Covid-19, and we have long argued for the system to be designed to promote and reward investment. It is therefore encouraging to see the Chancellor sharing our focus on promoting investment through his announcement of the new ‘super deduction’.”

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