Alcohol duty rise will pile yet more pressure on hospitality

Prior to the budget being announced, I said the best we could hope for as an industry was to be left well alone. But sadly, that was a pipe dream.

Even though the unprofessional trailing of details hinted it was going to be a lot worse, it’s still nothing to shout about. A vast increase in employment costs, rises to alcohol duty for spirits, and a lessening of the rates relief currently available to the hospitality sector means more businesses are bound to go under.

Since Covid and Brexit, many companies have never fully recovered, continuing to operate on the slightest of margins. These added costs and lessening of support will be the final nail in the coffin for many.

To fully understand how damaging this is for small retailers and hospitality, you need to go way back. The sector was first struck by Covid and the lockdowns. It was hit by increasing costs in alcohol, thanks to increased duty and bureaucracy. Cost of living continues to reduce disposable income and custom.

Now, the government continues to pile on costs – and we’ll need to wait and see if any of this actually increases the public’s spending power by putting more money in their pockets. One thing is for sure: the only way businesses will survive is by increasing prices. And that will have an added effect on inflation.

The changes in alcohol duty will not only push up the price of a tipple for Great British drinkers, but it will also stifle growth. Whilst duty on alcoholic drinks served on draught will reduce by 1.7%, wine, spirits, bottled beers, and cider will see duty rise by retail price inflation, which will impact the grocery sector. Both the lower and higher rates of the soft drink levy will also increase to £1.94 and £2.59 per 10l respectively.

Read more: Your reactions to the new government’s £40bn tax-raising budget

Recent rises in alcohol duty have shown that the rise is passed onto consumers, leading to fewer sales and less money raised for the Treasury. So, to confirm another rise seems illogical.

But let’s get this straight. The hospitality and spirits industries are bursting with talented, creative, and entrepreneurial people. Where these businesses thrive, local economies succeed.

As much as the budget has not gifted us any giveaways, I have no doubt the industry will pull together, weather the storm, and come out the other side. All off the back of the exceptional people behind it.

And when that happens, the UK economy will once again reap the benefits our success, as it always does.