THE Tories’ claims that their changes to alcohol duty – which will see whisky typically taxed at 75 per cent on the bottle – represent a “Brexit Pub Guarantee” have been branded naive and fanciful by a leading industry body.
The Scottish Licensed Trade Association (SLTA), which has represented licensed trade establishments since 1880, hit out at the Conservative government over the duty changes, which came into effect on August 1.
The UK Government has brought in changes that will see alcohol taxed based on its strength and ended the freezing of alcohol duty (meaning it will rise by the 10.1% inflation rate) on the same day.
The result is that duty will increase overall, with most wines and spirits seeing rises, but will fall on lower-alcohol drinks and most sparkling wine.
The Tories, in what they have labelled a “Brexit Pub Guarantee”, have reduced the duty on draught beer and cider by 9.2%, while the standard rate of duty on packaged beer will rise by 10.1%.
This differential between on and off-sales duty was not previously possible because of EU regulations.
The SLTA hit out at the move, saying they had not been designed to benefit Scotland’s independent pub and bar owners.
Paul Waterson, a spokesperson for the body, said: “We are not convinced that this change in draft beer and cider duty will help us or our customers in any way. For the Chancellor to say this cut in draft beer duty is a ‘Brexit Pub Guarantee’ is as naive as it is fanciful.
“We know from experience that we don’t benefit from cuts to alcohol duty because the duty is paid by producers, who do not adjust their prices down accordingly when selling to us. It is a system designed to benefit the producers and the big pub companies.
“They are able to negotiate price discounts whereas smaller independent operators, such as our members, do not have that power.”
In 2021, the SLTA supported a radical proposal to cut duty in pubs and raise it in off-sales – a move that would boost the pub and bar business and simplify the system.
Waterson pointed to research from the Social Market Foundation which shows this could be “revenue neutral” to the Treasury. Its analysis set out how reforms to alcohol duty could boost pub sales by 100 million pints a year, providing a lifeline to the hospitality industry and reducing harmful drinking.
He added: “This would have been the radical change that we needed. Our premises would claim relief on alcohol duty paid under the current alcohol relief scheme which is in place at the moment for certain businesses. The changes today will keep the savings in the hands of the producers.”
The SNP have also hit out at the changes, claiming that the higher rate of tax on Scotch was the UK Government “squeezing the life out of Scotland’s whisky industry”.
The party said that Scotch whisky is the world’s number one internationally traded spirit, with exports reaching £6.2 billion in 2022 – accounting for 25% of all UK food and drink exports, 77% of Scottish food and drink exports, and supporting more than 10,000 jobs.
Argyll and Bute MP Brendan O’Hara and Richard Lochhead MSP – who represents Speyside where over 50% of Scotch whisky is distilled – have both expressed their dismay at the decision, saying the industry is being "disproportionately impacted by a UK Government Scotland did not vote for".
O’Hara MP said: “The UK Government are squeezing the life out of Scotland’s whisky industry, which plays a significant role not just in my constituency, but for the bank balance of the UK Treasury.
“Scotch whisky is the world’s biggest international traded spirit, which has been filling the UK Government’s coffers for decades.
“And yet, despite all the effort from rural communities and islands across Scotland, they continue to be hammered by a government they did not vote for.
“Scotland's whisky producing, rural and island communities have been the goose laying the UK Government’s golden eggs for too long – it’s time they were properly rewarded for the enormous contribution they’ve made.”
