UK Budget reduces duty and scraps escalator for beer only

The profit a publican can now expect to make on a standard £3.50 pint of beer and how the rest of the money goes towards covering tax, manufacture and supply as well as business overheads.

The UK’s Beer Duty Escalator which has put up the price of a pint by 2% above inflation every year since 2008, was scrapped in yesterday’s Budget which cut duty on beer by 1 pence rather than the 3 pence additional duty that was planned.

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However stablemates wine and spirits enjoyed no such respite and Chancellor George Osborne said that duty increases will take place on wine & spirits through the escalator on Monday 25th March, raising the price of a bottle of wine by 10 pence and that of a bottle of spirits by around 38 pence.

Duty on a 75cl bottle of wine is now £2 while that on a 70cl bottle of (37.5% ABV) vodka is now £7.41, up by 37 pence. Duty on a 70cl bottle of gin at 40% is now £7.90, up 39 pence.

However if the cost were to be passed on directly the increase in VAT would be 2 pence on a 75cl bottle of wine, 7.4 pence on a 70cl bottle of vodka and 7.8 pence on a 70cl bottle of gin.

Following the Budget, the Wine & Spirit Trade Association condemned the Chancellor for pushing ahead with inflation-busting tax rises on wines and spirits for the fifth year in a row and it has even hinted that the Budget concession to beer only may be illegal.
“If this was designated as a measure to support pubs it seems misplaced” stated WSTA’s Miles Beale, “over 41% of drinks sold in pubs are wine and spirits, contributing £9.4 billion per year.  The Chancellor’s decision ignores the growing value of the English wine industry and the UK spirits industry, which accounts for 18% of all jobs in the EU spirits industry.”

However Pubs of Ulster’s Chief Executive Colin Neil had no such scruples, stating that he welcomed the scrapping of the beer duty escalator as marking a significant victory for the industry.

But he warned, “Whilst we welcome today’s announcement and see it as a significant step forward, the end of the escalator doesn’t repair the damage already done to the trade over the last five years.  We must also remember that the chancellor still plans to increase all other alcohol duty and we can therefore expect an increase in the price of wine, spirits and cider.

“However, we must recognise that today’s announcement could mark a turning point for the industry. It also shows that Westminster has now recognised the value of the pub and the vital role it plays in the economy.  We would now call on Stormont to do the same.”

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