In a statement to the House of Commons yesterday (Monday 19 December), Exchequer Secretary to the Treasury James Cartlidge outlined the Government’s plan.
While usually new duty rates come in on 1 February annually, Cartlidge revealed the duty rates decision will be held until Chancellor Jeremy Hunt delivers the Spring Budget on 15 March 2023.
In addition, the Treasury minister said if any duty changes are announced then, they will not be implemented until 1 August 2023 in a bid to align with the date historic reforms for the alcohol duty system come in and equates to an effective six month extension to the current freeze.
Cartlidge said: “[The] announcement reflects this Government’s commitment to responsible management of the UK economy and supporting hospitality through a challenging winter.
“The alcohol sector is vital to our country’s social fabric and supports thousands of jobs – we have listened to pubs, breweries and industry reps concerned about their future as they get ready for the new, simpler alcohol tax system taking effect from August.
“That’s why we have acted now to give maximum certainty to industry and confirmed there will be just one set of industry-wide changes next summer.”
The move recognises the vital role pubs play at the heart of communities and is “great news” for the sector, according to Greene King chief executive Nick Mackenzie
He added: “This announcement is welcome and will do much to support our pubs and tenants through a challenging winter as the sector continues to face severe cost pressures.
“However, we urge the Government to keep its promise to modernise the alcohol duty system so it is fairer for pubs and supports lower strength products.
“Fundamental reform is long overdue and will open up investment in the sector, enabling pubs to continue to support communities up and down the country.”
Certainty needed
UKHospitality chief executive Kate Nicholls shared her thoughts on social media, with mixed reaction from the statement due to the lack of information about energy support.
She tweeted: “Positive news in the House of Commons as [the Government] confirms there will be no change to alcohol duty until 1 August – deferring what would have been an RPI increase.
“Hope that suppliers will work too to suppress inflationary pressures in supply chain but disappointing news [the Government] has also postponed announcement on future energy support until the new year rather than before Christmas as previously announced.
“Businesses are facing daily changing rates and contract decisions in January, so certainty was really needed.
“We urge OFGEM to continue to keep pressure on energy suppliers to deal fairly with commercial customers and bear down on continuing poor practices and onerous terms and conditions.”
Just before the Government confirmed reports about the announcement, The Society of Independent Brewers (SIBA) welcomed the change and called for further support to prevent further brewery closures.
“Independent breweries play a vital role in the British hospitality industry and are embedded in their local communities, providing jobs and adding greatly to local economies across the UK,” national chairman Richard Naisby said.
“The extension of the beer duty freeze will come as welcome news to these vital independent businesses, providing some certainty until the summer.
“But with breweries facing pressure from every direction and energy costs spiralling, we would urge the Government to go further to ensure the number of breweries in the UK doesn’t continue to decline.
“Independent brewers would like to see the new draught beer duty relief increased from 5% to 20% when it is introduced next summer to give our struggling pub industry a shot in the arm, as well as continued support for independent breweries under the energy bill relief scheme.”
Crucial thread
Similarly, the British Beer & Pub Association also commented on the reports prior to confirmation.
Chief executive Emma McClarkin added: “The decision to extend the freeze on beer duty will be welcomed by pubs and brewers alike.
“In 2022, our industry has faced pressures and challenges like never before. This freeze will allow £180m to be reinvested into our sector at a critical moment and inject a much-needed flurry of festive cheer for pubs and breweries.
“It shows the Government understands just how much our pubs and brewers mean to communities across the UK.
“Investment in our sector now will pay dividends in villages, towns and cities across the country for generations to come. Pubs and brewers are a crucial thread in the social fabric of our society and contribute not only economically but socially, connecting people in communities up and down the country.
“We look forward to working with the Government to implement the promised duty reforms in 2023, ensuring a fair and modernised rate system in the UK that support lower-strength products and our country’s pubs.”
The new system, which will come into force from 1 August 2023, means duty on drinks with alcohol content of under 8.5% will be reduced and a tax of 12.5% will be introduced for wines with an ABV of between 11.5% and 14.5%.
This will be in place for 18 months from the implementation of the new system. The Government claimed it will ‘help create a simpler, fairer and healthier duty system’.
