October 30th 2024.
As part of Labour's Autumn Budget announcement, Rachel Reeves shared some good news for drinkers - a decrease in draught duty by one penny per pint in pubs. However, this decrease will not apply to non-draught products, as the Chancellor plans to increase alcohol duty rates in line with RPI next year. This is part of Labour's efforts to address a £22 billion "black hole" in public finances.
But for beer lovers, this announcement comes as a relief, as the price of a pint is set to go down under Labour's plans. Unfortunately, not everyone is happy about this change. Leaders in the drinks industry have expressed concerns that this will lead to a decline in sales and potentially more pub closures.
It is worth noting that alcohol duty rates were frozen for almost three years, from autumn 2020 to August 2023, during which time the UK saw an increase in taxable revenue. However, when the then-Chancellor Jeremy Hunt introduced a tax on alcohol in 2023, in line with inflation, prices went up by 10%. He also changed the way duty was calculated for wine, resulting in a 20% increase in price.
In the following year, from September 2023 to August 2024, alcohol duty raised £11.8 billion, a decrease from the £13.1 billion raised in the same period the year before. The most significant drop was in spirits, with a revenue decrease of £750 million, followed by beer, which saw a £320 million drop.
Emma McClarkin, the chief executive of the British Beer and Pub Association, expressed her concerns about the potential negative impact of this change. She stated, "We know from experience that beer duty increases rarely raise expected revenues, especially when many consumers are facing the cost-of-living crisis and are increasingly sensitive to price. It's imperative that the government understands that any increase in beer duty could have a catastrophic knock-on effect, turning away customers and potentially reducing other taxes and employment opportunities. Only when the cost of business is reduced can pubs continue to be a vital asset to the economy and communities."
Meanwhile, the company behind popular drinks such as Magners and Tennent's, C&C Group, reported lower sales for the past half-year due to poor summer weather affecting cider demand. As a result, shares in the company dropped on Tuesday morning. However, they remain positive about the upcoming Christmas and New Year period and have plans in place to maintain encouraging trading momentum.
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