Drinks sector responds to Labour win

The UK drinks industry is calling on the new Labour government to work more collaboratively with the sector, cut alcohol taxes and implement action swiftly in support of hospitality.

Labour is set to become the governing party of the UK, having won the 2024 general election on 4 July with more than 400 seats. At the time of writing, two seats were left to declare. Conservatives took 121 seats while Liberal Democrats won 71 seats.

Labour leader Sir Keir Starmer will take over as prime minister from Rishi Sunak, marking the end of the Conservative government’s 14-year run.

One key issue for the drinks sector is the increase in alcohol duty.

The industry faced the biggest alcohol tax hike in nearly 50 years on 1 August 2023, with spirits duty rising by 10.1%.

During this year’s spring budget in March, outgoing chancellor Jeremy Hunt announced a freeze on alcohol duty until February 2025.

Mark Kent, chief executive of the Scotch Whisky Association (SWA), congratulated Starmer on becoming prime minister, as well as all the elected MPs.

“On a visit to Inchdairnie distillery in Fife last year, Sir Keir said that a government he leads will ‘back Scotch producers to the hilt’,” Kent recalled.“We look forward to working in partnership with him, the Secretary of State for Scotland and his whole cabinet to keep this commitment, and ensure Scotch whisky can continue to drive growth, create jobs and boost investment in Scotland, and right across the UK.

“There is much the new government can do to back Scotch whisky producers – from reducing the tax burden on spirits in the UK to protecting our industry from tariffs in key global markets.

“During the rest of 2024, there will be opportunities to support Scotch in the first budget of the new Parliament, secure a trade deal with India which will reduce tariffs on Scotch whisky in this key market, and work closely with the industry as we continue on our journey towards net zero.”

He added that the organisation looks forward to working with the MPs to “ensure that Scotch whisky is at the heart of the central mission of the next five years – growth and economic renewal”.
A spokesperson for the UK Spirits Alliance, which represents 280 distillers, said: “Last year the former chancellor introduced a 10.1% hike in duty, which sucked the energy out of a sector that was booming.

“The duty rise, contributed to inflation and consumers going out less; heaped more pressure on hospitality – as pubs are more than pints; and resulted in the Treasury losing £108 million in tax revenue in the period 1 August to 31 May compared to the same period the previous year.

“The UK’s brilliant whisky, gin and rum makers want to innovate and grow – and raise the spirits of the nation. But they can only do it if supported by a stable, fair tax regime under this new government.”

Trade body the Wine and Spirit Trade Association (WSTA) called on Labour to work with the industry to ‘promote growth, cut red tape and deliver an environmentally sustainable agenda’.

In 2022 the UK wine and spirits industry supported 413,000 jobs, generated £22.6 billion (US$28.9bn) in gross value added and contributed £76.3bn (US$97.6bn) in economic activity, the WSTA said.

‘Fresh chapter’

Miles Beale, chief executive of the WSTA, said: “We are looking forward to working with a new administration that has rightly called for closer partnership between business and government to deliver economic growth. It feels like a fresh chapter and a chance to move away from the increasingly disconnected and heavy-handed approach of the previous government towards a closer and more collaborative working partnership with Labour.

“Labour has pledged to support business with a stable policy environment and an approach to business taxation that allows long-term planning. We agree and are calling on new ministers to stick to these principles for the lifetime of the new Parliament – starting with making permanent the temporary easement for wine duty and delaying the Extended Producer Responsibility (EPR) scheme to ensure it is fit for purpose.

“The new government needs to demonstrate quickly its commitment to deliver the stability it has promised for business by answering calls from our industry for support, partnership and clarity.”

The WSTA also noted that after the implementation of duty increases, sales volumes have declined and alcohol inflation is running at nearly three times the headline rate – while revenue from duty receipts has decreased in the past seven months.

Beale added: “Retaining the easement would do exactly what Labour has promised for a new business tax regime: it puts a stop to chaos and delivers a strategic approach.”

Hospitality could drive economic growth

Meanwhile, trade body UKHospitality is urging the Labour Party to deliver on its manifesto commitments to replace business rates and reform the Apprenticeship Levy in the first 100 days of government.

The Labour Party has pledged to replace the business rates system in England and level the playing field between high-street businesses and online giants.

A commitment to delivering these actions in the first 100 days “would be a clear sign that the government backs hospitality as the central pillar of the everyday economy” said UKHospitality chief executive Kate Nicholls.

“Swiftly addressing business rates would fulfil a longstanding ask of the sector and avoid a cliff-edge in April, when current relief is set to end and rates are due to increase again,” she added.

“Hospitality, with its presence in every constituency, can act as a powerhouse for driving economic growth, creating new jobs and regenerating our towns and cities. I look forward to working in partnership with the new government to help deliver its manifesto commitments and realise hospitality’s growth ambitions.”

The Night Time Industries Association (NTIA)’s CEO, Michael Kill, called on the new government to “work towards changing the narrative around the value of the night-time economy” following years of “feeling misunderstood and undervalued”.

Kill highlighted several areas that need key action, including the appointment of a minister for the night-time economy.

“This role will ensure focused attention and strategic direction for our sector at the highest level of government. Additionally, establishing regional representatives will then also facilitate effective strategy, communication and coordination across regions.

“Independent businesses and culture have suffered heavily over the past four years. Rebuilding and protecting existing businesses, creating a foundation for the future, and funding grassroots spaces and cultural events are essential for recovery. Implementing a heritage protection scheme for venues and cultural spaces will go some way to ensuring the preservation of venues that are integral to our communities.

He added that the new government must “prioritise meaningful policy changes, strategic and targeted financial support, and collaborative efforts to shape the future of nightlife”, which would ensure a “sustainable and thriving future” for the sector.