Chancellor Philip Hammond set out the Autumn Budget today (22 November) at the House of Commons, including the government’s upcoming plans for tax and spending, covering everything from alcohol, tobacco to business rates.
While duty on beer, wine and spirits is to be frozen, there will be an increase in duty on higher strength ciders, along with an extension on the £1,000 business rate relief for most pubs in England.
Following this statement, Campaign for Real Ale national chairman, Colin Valentine, commented: “Freezing beer duty will help arrest rising beer prices and keep the British pub going tradition affordable. We would also like to see a wholesale review of the business rates regime, which unfairly penalises pubs and rewards online retailers.”
But regarding the increased duty on higher strength ciders, Valentine said: “This will be disappointing news for a number of traditional cider producers who will be hit by this measure unless an exemption for traditional produce can be secured.”
The National Federation of Wholesale Distributors (FWD) praised the announcement that wholesalers and retailers will be given longer notice of duty rises to enable them to sell through alcohol stock, while also welcoming the new duty band on ciders.
Under the Government’s new annual tax policy making cycle, alcohol duty rises announced in the Budget will come into force on 1 February 2018 – a delay the FWD had requested of the Chancellor, as it enables wholesalers to plan Christmas pricing with the reassurance that duty will not rise until the New Year.
FWD chief executive James Bielby, said: “If duty rates must rise it is absolutely vital that they are telegraphed well in advance or wholesalers’ trading plans for the busiest time of the year would be impossible to draw up. The Office of Budget Responsibility has said it expects the change to be largely neutral for tax receipts, so it is a concession the Government can afford to make to help the wholesale trade maintain its profitability.”
Bielby added: “We have told HMRC that legislation is the only way to regulate the sale of white ciders, as asking wholesalers to voluntarily delist or sell above market prices has a serious knock-on effect on other product sales.”
Elsewhere, Charles Ireland, managing director at Diageo UK, noted that while the duty freeze provides some respite for Britain’s drinkers, taxes on spirits remain amongst the highest of any major economy in the world.
Ireland added: “We now repeat our call for a review of the alcohol duty system to deliver fairness for Scotch whisky, which is exactly the kind of unique British product the UK needs to thrive after Brexit.”
Furthermore, Ian Wright, director general at the Food and Drink Federation, said that it welcomes the focus on investment in skills, infrastructure and research and development, where Hammond has pledged £30m in digital skills distance learning courses, as it will unlock the productivity potential within the UK food and drink industry.
Hammond also revealed that duty on hand-rolled tobacco would increase by an additional 1% and will continue to rise by 2% above the RPI inflation, while the minimum duty on cigarettes that was introduced in March – where a bottle of Scotch whisky was increased by 36p, pint of beer by 2p and cider by 1p – will also rise.
Meanwhile, UK productivity and growth has been slashed from 2% to 1.5% since March, and £3bn will be set aside over the next two years to prepare as the UK leaves the EU.
