The government has implemented two tax reliefs aimed at growing the UK’s alcohol sector, although critics have said they won’t be enough to offset other cost hikes this year.
Labour will implement a draught relief increase, cutting 1p duty off draft pints, as well as small producer relief, which the government said will help small breweries innovate and support economic growth. The two reliefs are together worth £85m.
Exchequer secretary to the Treasury, James Murray, said the changes will “boost sector growth” and “put more money in working people’s pockets.”
“The government’s increased investment in Draught Relief means that draught beer sold in our community pubs has a lower rate of alcohol duty than beer sold in supermarkets and should encourage more people to support their local,” Richard Naisby, Chair of the Society of Independent Brewers and Associates (SIBA), said.
“At the same time by going further on Small Producer Relief, the government can help small breweries to compete and grow their businesses,” Naisby added.
Small breweries have struggled to stay afloat due to soaring operational costs and controversial restrictions imposed by large breweries, which lock pubs into buying from big brewers.
Turnover at Brewdog, the UK’s largest independent craft beer company, accounted for just under 15 per cent of all turnover at UK breweries last year, while small breweries have entered insolvency at an alarming rate.
Draught relief won’t make a ‘jot of difference’
The Wine and Spirit Trade Association (WSTA) has argued the draught relief won’t affect the market at all.
“Government is playing a game of smoke and mirrors, distracting consumers – especially with the suggestion of a penny off a pint,” Miles Beale, chief executive of the WSTA said.
“Draught relief isn’t going to make a jot of difference to struggling publicans, who have been swamped with the highest duty rises for wine and spirits in almost 50 years.”
Excise Duty on all wines between 11.5 per cent abv and 14.5 per cent abv (alcohol by volume) is set to rise on 1 February. The change was introduced as part of Rishi Sunak’s new duty system last year but was postponed.
The single amount of duty paid on wines between 11.5-14.5 per cent abv – £2.67 – is set to be replaced with a scaleable system whereby stronger wines are taxed more. For a bottle of wine at 14.5 per cent abv, this will see wine duty increase from £2.67 a bottle to £3.09.
“Make no mistake there is no good news attached to the duty changes coming into force tomorrow. Consumers won’t see any benefit at all… Prices are going up whatever you buy, wherever you buy from,” Beale said.
Hospitality business are also struggling with business rates, which will again rise in line with inflation this year, and higher labour costs due to changes to the minimum wage and employers’ national insurance costs.
“[Draught relief] helps sure [sic] up public finances and helps to fund the investment needed to grow the economy and fund public services,” the government said.
