Alcohol price rise decision confirmed in Spring Statement
DRINKERS and pub landlords will be raising a glass to Rachel Reeves today as she dodged tinkering with alcohol taxes in her Spring Statement.
The Chancellor avoided raising any alcohol duties in the Spring Statement, as expected.
The update on the nation’s finances was expected to not include any huge changes to taxes.
Decisions on alcohol duty are usually reserved for Budgets.
See The Sun’s live blog on the Spring Statement here
Alcohol duty is charged on all drinks with an alcohol by volume (ABV) strength exceeding 1.2%, either at the point of production or upon importation.
These widely unpopular levies typically increase annually in line with inflation, as they did in February.
This has put pressure on booze firms, pubs and retailers to increase prices.
And new recycling fees for packaging waste which come in next month have added to the issue.
Miles Beale, chief executive of the WSTA, said: “The Government continues to claim that these tax hikes are part of their grand plan to fill the black hole in public finances, but a series of record-breaking duty increases is having the opposite effect.
“There are no winners under the UK’s punitive alcohol tax regime —higher duty rates mean consumers buy less, leading to reduced revenue for the Exchequer.
“Meanwhile, businesses are being squeezed, and consumers are left facing ever-rising costs.”
What’s happened to alcohol duties?
Hated alcohol levies last rose in line with RPI inflation on Saturday, February 1.
Spirits like gin and vodka saw a 3.6% price rise, adding roughly 30p to a bottle.
The duty on fortified wines like port and sherry increased by 3.6%.
However, sparkling wine duty decreased slightly, by 1p per bottle.
Beer and cider on draught benefited from a 1.7% duty cut, while duty on other formats rose 3.6%, and pre-mixed drinks saw a 3.6% increase.
However, wine was the hardest hit, with a 20.2% duty increase on a bottle of 14.5% ABV wine, adding 54p.
This is because the Government introduced a new system which taxes wine by strength.
Wines between 11% and 12.5% ABV saw small duty fluctuations, either slightly increasing or decreasing.
However, for wines stronger than 12.5% ABV, duty increased substantially, with the largest increases impacting higher strength wines.
This latest increases comes on top of previous duty hikes in August 2023, resulting in a whopping 98p total increase on a bottle of 14.5% ABV red wine in just 18 months.
What does this Spring Statement mean for Rachel Reeves?
By Ryan Sabey, Deputy Political Editor
RACHEL Reeves is trying shift any blame away from herself and the Labour government as it grapples with the sluggish economy.
The Chancellor is telling MPs that the “world had changed” meaning she has to take drastic action when it comes to spending and welfare.
The trouble for Ms Reeves and Sir Keir Starmer is that they put growth as their “number one” mission and that, to put it mildly, is stalling.
The independent watchdog say growth forecasts has halved for this year and the financial headroom wiped out – hence the savings to be made elsewhere.
But for Ms Reeves all this puts her in a very tight spot insisting she will stick to her iron clad rules – with her looking to find up to £15 billion of savings.
The Tories and commentators are aiming their fire over how she hasn’t helped herself as growth has fallen.
They point out that she was the person who decided to go on a £40 billion tax raid at October’s Budget – with £25 billion of it falling on the shoulders of business.
The upcoming Donald Trump-led tariff war could easily throw the government off course again unless a limited trade deal can be struck.
Rachel Reeves will be pushing every leaver possible to get that over the line before it kicks in next week to give her some breathing space.
But we could be back at square one come the autumn with the Budget to balance the books – with speculation there could be tax rises and Whitehall departments scratching around for more savings.
Pint prices will STILL rise
Industry experts have cautioned that the average price of a pint is set to exceed £5 for the first time next month.
Drinkers will face an average cost of £5.01 per pint — an increase of 21p — as landlords are forced to pass on the burden of soaring costs, driven by Labour‘s previous tax measures announced in the Autumn Budget.
These include a rise in the minimum wage, higher National Insurance bills for employers and a cut to business rates relief — slashing support from 75% to 40%.
The BBPA estimates they will cost the sector £650million, leaving many pubs with no choice but to raise prices.
Emma McClarkin, of the BBPA, said: “The cumulative impact of these taxes and regulations is now plain to see and it is highly unfortunate that the only way many pubs can remain viable is to pass on the array of upcoming costs to consumers.
“No one wants to see the cost of an average pint rise by a further 21p and break the £5 average pint barrier.
“It’s more urgent than ever that the Government looks at ways to cap or reduce the costs of business so we can keep pubs open and make sure the price of a pint remains affordable.”
The Sun’s Save Our Sups campaign is calling on ministers to throw a lifeline to boozers.
Tim Black, of Frontier Economics, said: “The sector is at the sharp end of a wave of changes.
“The cumulative impact will be significant.”
What else was said in the Spring Statement?
Elsewhere in the Spring Statement, Rachel Reeves confirmed a raft of benefit changes.
The changes were outlined last week when the Department for Work and Pensions (DWP) released its Pathways to Work green paper, but they have been confirmed today.
The new package will see incapacity benefits for new claimants frozen until 2030 rather than increased in line with inflation.
This means the £416.19 a month incapacity amount for those who have limited capability for work and work-related activity will remain at its current level.
There will also be a slight reduction to the basic rate of Universal Credit.
These are some of the other key changes:
- Merging jobseeker’s allowance and employment support allowance, with a system that awards higher payments to those who have a work history compared to those who have not.
- Abolishing the Work Capability Assessment (WCA) by 2028, with all health-related payments to be transitioned to PIP in the future.
- Banning under-22s from claiming incapacity benefits under Universal Credit entirely.
- Temporarily introducing an above-inflation rise to Universal Credit’s standard allowance (until 2028), while reducing the highest incapacity payment.
- Raising the eligibility threshold for PIP, achieving £3.4billion in annual savings.
- Launching a “Right to Work Guarantee”, allowing unemployed individuals to attempt returning to work without losing benefits if they find it unsustainable.
Plus, the Chancellor confirmed millions of workers will get a pay rise of £1,400 a year from next week.
The Government had announced in October it is hiking the National Living Wage by 6.7% from next Tuesday.
Ms Reeves confirmed three million people will get the pay boost from next week.