Millions of Brits will be spared from paying more for booze after Chancellor Jeremy Hunt froze alcohol duty in his Autumn Statement.
Alcohol duty is a type of tax that manufacturers pay when making products. The tax varies in cost dependent on the alcohol content of the drinks. In general, spirits and wines are taxed much heavier than ciders and beer, owing to their stronger alcohol content. The duty is generally passed onto consumers by manufacturers, but the product price rises are at their discretion.
The Chancellor said in the House of Commons: "I know that for many people, going to the pub has become more expensive. I’ve listened closely to the persuasive arguments on alcohol duties from the Scotch whisky industry. So, as well as confirming our Brexit pubs guarantee, which means the duty on a pint is always lower than in the shops, I’ve decided to freeze all alcohol duty until August 1 next year. That means no increase in duty on beer, cider, wine or spirits."
The decision came as a major relief to the drinks industry, which was facing a second tax hike in the space of four months. The Chancellor had "raised the spirits of the sector", according to the UK Spirits Alliance's spokesperson, Stephen Russell.
He said: "We raise a toast to the Chancellor today for his decision to freeze duty and thank him for listening to thousands of distillers, landlords and bar owners up and down the UK. He has raised the spirits of the sector, and his decision today is a vote of confidence in this vibrant homegrown sector. Today’s freeze will drive growth in the industry, support jobs and help consumers at a time when household budgets continue to be squeezed."
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If the Chancellor did choose to increase the duty by RPI, which is currently at 8.9%, it would have resulted in a price rise of 68p per bottle of wine on average, and £1.50 on spirits. The tax rise would've also meant the price of red wine would exceed £8 for the first time, while gin and vodka could've reached £18.
The Wine and Spirit Trade Association welcomed a freeze to alcohol duty, claiming it came as “a huge relief” to a sector that has “taken a battering”.
The association's chief executive, Miles Beale, said: "We are pleased that the frustrations of consumers, who are fed up with never ending price rises, and of businesses struggling with the cost and complexities of the new system have been heeded. These are ongoing concerns about the impact of the new regime, which need to be kept under review. We implore the Chancellor and his team to lock in the freeze until at least the end of this Parliament. This will keep people in jobs and mean consumers will still be able to enjoy a drink at a price they can afford."