A stark warning has been issued to the Chancellor of the Exchequer, Jeremy Hunt, regarding the potential closure of numerous British pubs unless a reduction in alcohol duty is implemented in the upcoming Budget in March. Breweries such as Asahi, Budweiser, and Greene King have penned a letter to Hunt, advocating for a 5% decrease in duty to safeguard their beer brands and support publicans.
The British Beer and Pub Association warns that without intervention from HM Treasury to mitigate spiralling costs, up to 750 pubs are at risk of shutting their doors by mid-2024. This follows the closure of over 500 pubs in 2023, underscoring the sector’s urgency to lower beer and other alcohol duties, alongside a VAT reduction on non-alcoholic beverages and food, and a cap on the business rates multiplier.
In their correspondence, the breweries stress, “No government should overlook the decline of such a vital economic and cultural cornerstone. By bolstering a prosperous beer and pub sector, we offer you a direct route to achieving authentic Levelling Up across the nation.”
The letter also points out the strain on UK pubs due to high energy bills, Europe’s third-highest beer duty, and the absence of VAT relief for the on-trade, all contributing to the forced closure of establishments.
“The Spring Budget presents an opportunity to ensure that the Great British beer and pub sector continues to drive growth and prosperity for the local high street and the national economy at large,” they assert.
This comes as the Wine and Spirit Trade Association (WSTA) also submits a list of Budget proposals to the Treasury, as the alcohol industry navigates its most significant duty reform in over fifty years. The trade body is appealing to the Chancellor to enact a duty reduction on alcohol following last year’s reclassification based on ABV, which led to the UK bearing some of the highest wine and spirit duty rates globally.
Due to the shift to higher rates, the WSTA has pointed out that the unexpected rise in inflation to 4% this month is attributable to the increased tax on alcohol, alongside reduced Treasury revenue from falling sales—a situation the association had previously cautioned about.
In light of these figures, WSTA’s chief executive, Miles Beale, emphasized that alcohol inflation is now three times higher than the previous year, stating, “If the government genuinely aims to reduce inflation, the straightforward solution is to lower alcohol excise duty at the next Budget.”
In January last year, alcohol inflation was at 3.5%. However, it has nearly tripled since, with spirits at 8.9%, wine at 7.8%, and fortified wine at an alarming 18.7%.
