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Spring budget: ‘disappointing but predictable’

Jeremy Hunt’s alcohol duty freeze has been welcomed by the trade, however many believe more should have been done to support the spirits and hospitality industries.

alcohol duty
As part of the spring budget, UK alcohol duty will be frozen until February 2025

The Scottish Licensed Trade Association (SLTA) said the lack of a VAT reduction ‘does nothing to help struggling hospitality businesses’.

Colin Wilkinson, SLTA managing director, said: “It’s a torrid time for licensed trade operators across Scotland just now – everyone is struggling with ongoing cost-of-living issues.

“There was no response to pleas from SLTA and other industry groups for a VAT reduction for the hospitality sector in the chancellor’s autumn statement last November, so today’s news is extremely disappointing but predictable.

“Doing so in his spring statement would have brought some welcome relief to businesses across the hospitality and licensed trade spectrum, which are struggling with huge utility bills and other costs.

“Obviously, we welcome Mr Hunt’s decision to increase the VAT threshold from £85,000 to £90,000 from 1 April, which might help some businesses in Scotland but, without a reduction in VAT, it is inevitable that many hospitality businesses will continue to struggle.”

The Night Time Industries Association (NTIA) expressed its ‘profound disappointment and concern’ at the budget and said the measures ‘fall woefully short’.

“The economic challenges faced by our sector are catastrophic, and following today’s spring budget announcement, the lack of support will have a profound impact on this sector for years to come,” said Michael Kill, CEO of the NTIA.

“For months, the entire sector has been providing the government with critical information outlining our precarious situation and the urgent need for supportive measures to sustain businesses through these turbulent times.

“In simple terms, it’s time for change. We have lost faith in the government. The livelihoods and businesses we represent are not political pawns but vital contributors to community wellbeing across the UK. It is imperative that the government recognises this and takes decisive steps to support the sector.”

Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA), questioned its duration: “The announcement that the freeze will last only until February is also a source of irritation for businesses. The recent pattern of raising alcohol duty at the spring budget and the autumn statement is very unsettling for the industry. We need to go back to one announcement a year to give businesses certainty.”

Ed Baker, managing director at Kingsland Drinks, said that the freeze will help ease inflationary pressures: “We are encouraged that the government has listened to a very united industry in recent weeks and acted accordingly.

“While this step will ease pressure in the short term, we urge the government to tune into the reality facing all parts of the drinks industry and continue to listen. It’s critical we all work to preserve the buoyancy of our innovative and hard-working sector that employs thousands of people nationwide – and brings in much-needed revenue to the Treasury.

An unfair system

Many in the industry had been campaigning for a cut in alcohol duty, rather than a freeze. Karl Mason, founder of Masons of Yorkshire Gin, said: “Freezing, or even better cutting, alcohol duty supports British businesses like mine and boosts revenue. I’d encourage any chancellor to go even further next time.”

Stephen Russell, founder of Copper Rivet Distillery and spokesperson for the UK Spirits Alliance, which represents 280 distilleries, said that the freeze “is good news for spirits drinkers, good news for pubs and bars and the wider economy, and good news for the Treasury as it will enhance revenue for the Exchequer”.

He continued: “Spirits continue to be the highest taxed alcohol category in the UK – most people are shocked to hear that 80% of a bottle of gin is tax. We have the highest spirits duty rate among G7 nations, despite being a national success story. We look forward to engaging with HM Treasury on how we improve this.”

Aaron Damiano Sparkes, founder of Whisky 1901, agreed: “The news that the alcohol duty freeze will be extended to February 2025 is a welcome surprise for the whisky and wider alcohol industry.

“However, the current system still discriminates between alcohol beverage categories, with consumers who drink 14 units of cider a week being taxed £1.23 versus those who drink Scotch being taxed £4.42. Scotch is already the highest-taxed alcoholic product in the UK.

“This contradicts the UK government’s pledge to support Scottish whisky – an industry that contributes £7.1 billion in exports to the UK economy and supports more than 66,000 jobs across the UK. Scottish distilleries are popular tourist attractions and generate crucial income for other businesses in their local communities.”

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