Budget 2018 – Victory for drinkers as Chancellor announces freeze on duty for beer, cider and spirits – but wine will cost more

In an early Christmas present for drinkers and struggling pubs across the country, the Chancellor scrapped a planned tax hike in line with inflation, which would have seen prices rise by 3.4 per cent.

The planned tax hike would have added as much as 30p to the price of a bottle of spirits such as gin and whisky.

It would have also added 2p to the price of a pint of beer or cider.

But wine duty will rise in line with inflation by 3.4 per cent, adding 7p to a bottle of wine and 9p to a bottle of fizz, it was announced in today's Budget.

The price of high-strength cheap white ciders will also go up. The rises will take place from February 1, 2019.

Last year, Hammond froze duty on all alcohol except white ciders in an effort to target the "excessive consumption by the most vulnerable people".

The drinks industry had been lobbying for a freeze on duty, arguing it would generate more revenue for the Treasury because it would help drinkers and boost business.

The Wine and Spirits Trade Association has welcomed a freeze on duty for spirits – but said the decision to increase wine rates was a "hammer blow".

Miles Beale, chief executive of WSTA, said: “We welcome the Government’s decision to freeze duty on spirits, which will support this great British sector to invest, grow and create jobs – as well as supporting the public finances through increased revenues.

"However, the decision by the Chancellor to increase wine rates significantly is a hammer blow to this great British industry.

"It actively undermines a sector that has been hardest hit since the Brexit referendum and will be thoroughly unwelcome for the 33 million consumers of the nation’s most popular alcoholic drink.

"This inflationary rise is grossly unfair, unjustified and counter-productive. The UK is the world’s biggest wine trading nation and, as such, deserves government’s support, not punishment."

It's thought Hammond was able to freeze duty on beer, spirits and cider because of a £13 billion windfall from better-than-expected tax receipts.

The move to freeze beer duty will please drinkers, pubs and Tory backbench MPs, who wrote to Hammond to demand he scrap the planned hike last week.

They argued a rise could close struggling pubs and put 3,000 jobs across the trade at risk.

Freezing the tax hike is said to save pubs and drinkers £110million over the next year.

Beer duty in the UK is already the third highest in Europe at 38p on 3.5 per cent ABV lager and 54p for a 5 per cent ABV pint.

Brigid Simmonds, chief executive of British Beer & Pub Association, said: "Pub-goers across the UK will be toasting the Chancellor tonight following his decision to freeze beer duty."

"Overall, this has been a great Budget for pubs and pub-goers. Cheers Phil!"

David Cunningham, programme director for “Long Live the Local” agreed and said: "Pub goers across the country can raise a glass to this."

But he added: "However, today’s measures cannot be a one off if we want to secure the future of pubs. We forecast that one in ten pubs (12 per cent) could still close within five years if the financial pressures they face from a range of taxes are not eased in subsequent budgets."

National chairman of the Campaign for Real Ale (CAMRA), Jackie Parker, was more cautious with her praise and said: “A decision to freeze beer duty is welcome, and will no doubt go some way to keeping the British pub-going tradition affordable.

“However, the decision to implement the business rates relief for some and not all pubs is not enough to help protect pubs from extinction – we need wholesale reform of the business rates system to tackle the grossly unfair burden placed on pubs."

Earlier this month, the WSTA argued that pubs, drinkers and the wine and spirits industry would be hit hard by any tax rise – and said a freeze would add more to the Treasury's coffers.

The Chancellor raked in a £380 million windfall from alcohol duty between February and August this year from the freeze – a 6 per cent increase on last year.

But Treasury Minister Robert Jenrick claimed last month that a freeze on alcohol duty has "come at a significant cost to the Exchequer in lost revenues".

The WSTA claims that 55 per cent of an average priced bottle of wine and 74 per cent of a bottle of spirits sold in the UK is now taken by the Treasury in tax and VAT.


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