Rise in spirits duty could close more British pubs

The Wine and Spirit Trade Association has warned that more British pubs will be under threat of closure if chancellor Philip Hammond increases spirits duty in the forthcoming Budget.

The WSTA warns the UK chancellor that a spirits duty increase could lead to the closure of more British pubs

The WSTA has teamed up with the Association of Licensed Multiple Retailers to call for chancellor Philip Hammond to scrap his five-year plan to raise alcohol duty, and do more to support the British pub following a spate of pub closures. On average, 21 pubs are closing each week across the UK.

Wine and spirit sales in UK pubs account for 36% of alcohol sold across the bar, worth almost £6 billion to pubs in the 12 months to September.

Sales of wine and spirits in the on-trade account for 46.2% of new openings in the last two years compared to just 39% of closures.

New research by CGA Strategy on behalf of WSTA shows that, on average, four new spirit brands were added to the back bar since 2013, meaning that there are now an average of 36 spirit brands behind the bar.

Venues that have expanded their spirits range witnessed a 10.6% increase in value sales, versus those who decreased their range, who saw declining sales of 1.7%.

According to the WSTA, landlords across the country have had to pay huge duty bills, totalling £843 million on wine and spirits alone, into the Treasury coffers, the equivalent of almost £17,000 per pub.

At the current rate, the total duty collected from British pubs by the end of the year is set to soar to over £2.1 billion if Hammond increases the high duty rates on alcohol, pubs across the country could be hit by a duty tax hike for a second time this year and stand to lose an extra £29m in 2018.

In March, the chancellor increased duty by inflation at 3.9%, which added 30p to an average priced bottle of spirits.

The chancellor plans increase spirit duty again, by 3.4%, just 8 months after the last one.

The inflationary increases are part of a government policy planned to last for the duration of this Parliament, which means the government is set to rake in an extra £280 million from British pubs over the next four years, £2.4bn per year by 2022.

Miles Beale, chief executive of the WSTA: “The chancellor is in danger of missing a huge trick. Not only could he support British pubs by scrapping his plans to raise already punitive duty rates for a second time this year, but he could also show his support for the wider UK hospitality sector.

“He needs to change tack because the pain will not end there, with established government policy being to inflict repeated duty hikes throughout the rest of this Parliament.

“Wine and spirits duty accounts for more than a third of annual pub sales. We are calling on Philip Hammond to help save our British pubs by freezing duty, allowing them to reinvest and stay in business.”