Delivering his Spring Budget on March 15, 2023, Mr Hunt announced alcohol duties would rise with inflation – and the Government would reform the levies based on an alcohol drink’s alcoholic strength, according to iNews reporting.
The alcohol taxation improvements Mr Hunt announced could mean a 20% increase in alcohol taxation, adding 44 pence to an average bottle of wine.
Using alcohol taxation to make alcohol less affordable is a proven alcohol policy solution recommended by the World Health Organization (WHO). Raising alcohol taxes is highly effective in protecting people from alcohol harms, preventing the onset of alcohol use among children and youth, and generating additional revenue that can be re-invested in the healthcare system.
This triple-win effect of alcohol taxation is urgently needed in the UK. Alcohol deaths are rising, other alcohol harms are also increasing and are placing a heavy burden on people, communities, society at large and the economy. The British healthcare system, the NHS, is seriously struggling to cope with magnitude of alcohol harm.
In December, Mr Hunt had decided to extend the alcohol duty freeze until August 1, 2023. Now the Chancellor decided to end it on August 1, and then ensure alcohol duties will rise in line with inflation.
Alcohol harm in the UK
Alcohol is the number one risk factor in death, ill-health and disability amongst the working age population in Britain. And more alcohol harm means lower economic growth due to ill health and under-employment. Alcohol is behind a very significant proportion of the people who are not working due to long-term ill health.
The UK is currently facing a serious crisis in alcohol harm. The number of alcohol deaths increased massively during the COVID-19 restrictions and deaths are remaining at historically high levels.
Ensuring that alcohol is more expensive is one of the simplest and most effective solutions.
In January, Movendi International reported about analysis from Oxford University scientists Professor Carl Heneghan and Dr Tom Jefferson that revealed an increase in alcohol-related disease in the UK after the coronavirus pandemic.
In November 2022, a broad coalition had already called on the UK government to conduct an Independent Review on Alcohol Harm to inform a new national Alcohol Strategy.
Improved alcohol policy solutions are urgently needed in the UK to tackle the increasing burden of alcohol harm which is affecting families, communities, and especially children in the UK.
The Coalition highlighted the harm caused by the products and practices of the alcohol industry and the lack of a government strategy to tackle this burden since 2012.
In the UK,
- Alcohol is the leading risk factor for death, ill-health, and disability amongst 15-49-year-olds.
- Alcohol causes more working years of life lost than the ten most common cancers combined.
- The COVID-19 pandemic has exacerbated alcohol harm leading to alcohol deaths reaching an all-time high.
- Deprived communities are disproportionately affected by alcohol harm, despite consuming less.
- The estimated cost of alcohol harm to UK society is at least £27 billion every year.
- Less than half is offset by tax revenue from alcohol.
Previously, two modeling studies from England highlighted the need for urgent alcohol policy action by the UK government to prevent alcohol-caused ill-health, save lives and save money for the National Health Services (NHS). According to both reports, the increase in alcohol use, during the COVID-19 pandemic by those who use alcohol heavily, could lead to the alcohol burden increasing exponentially in the coming years.
‘Draught Relief’ will reduce the alcohol tax burden on alcoholic drinks sold in bars, pubs, and restaurants
Chancellor Hunt promised a “Brexit pubs guarantee” in his budget, with the discount rising from 5% to 9.2%. ‘Draught Relief’ will reduce the alcohol tax on qualifying alcoholic products sold in on-trade venues, such as pubs, from draught containers containing at least 20 litres.
The duty cut will shave eleven pence off draught beer compared with beer sold in supermarkets, as per The Guardian reporting.
One of the aims of this policy is to try to reduce the increasing gap in price between on- and off-trade alcohol.
Other than that the Chancellor did not offer more details on a longer-term pledge of a “Brexit pub guarantee”.
Mr Hunt told MPs, according to The Independent:
From August 1 the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee. British ale may be warm, but the duty on a pint is frozen.”
UK Chancellor Jeremy Hunt
But the blanket alcohol duty freeze will end on August 1st, meaning levies will rise in line with inflation at 10.1%. The effect on prices will be coupled with increased duty on higher strength alcoholic drinks planned as part of reforms of alcohol duty unveiled in 2021.
Improving alcohol taxation on UK – welcomed by civil society
The alcohol duty has been either frozen or cut every year over the last decade, apart from 2017.
These repeated cuts and freezes to the alcohol duty have cost British society more than £8 billion over the past 10 years.
In response to the announcement, the chief executive of the Institute of Alcohol Studies (IAS) Dr Katherine Severi said:
Cuts and freezes to alcohol duty have cost the public purse more than £8 billion over the past 10 years. Today’s announcement by the Chancellor that most alcohol duties will rise by inflation will raise revenue for vital public services. We welcome this decision.
With alcohol deaths at their highest level on record, now it is more important than ever to focus on improving health by tackling cheap alcohol.
It’s high time the alcohol industry started paying its way towards the cost of alcohol harm.
We urge the Government to continue to prioritise public health by keeping alcohol duty in line with inflation going forward.”
Dr Katherine Severi, chief executive, Institute of Alcohol Studies (IAS)
Responding to the UK Chancellor’s decision to increase most alcohol duty from August 1st, Professor Sir Ian Gilmore, Chair of the Alcohol Health Alliance UK, said:
The Government’s decision to increase most alcohol duty today is a real win for our nation’s health. This much needed action should help to stem the rise in alcohol harm and pressure on the NHS that we have seen build in recent years when duty has been cut or frozen. We ask that the revenue raised from the duty increase be used to fund frontline NHS and alcohol treatment services which are currently not equipped to treat the soaring numbers of people drinking at high-risk.
While the announcement today is a positive move in the right direction, there is still a long way to go to significantly reduce the harm caused by alcohol. To make this and the proposed alcohol duty reform most effective, the government should now follow up by introducing an automatic annual uprating mechanism so that the benefits are not lost through future cuts to duty. This cannot be a one-off increase but needs to be part of a long-term plan to reduce the affordability of alcohol and its harms.”
Professor Sir Ian Gilmore, Chair, Alcohol Health Alliance UK
Scottish Health Action on Alcohol Problems (SHAAP) also commented on the UK Chancellor’s decision to increase most alcohol duties. Commenting on the Budget announcement that alcohol duties are to increase in line with inflation, and that the duty system is going to be based on alcoholic strength from August 1, Dr Alastair MacGilchrist, Chair of Scottish Health Action on Alcohol Problems (SHAAP), said:
Simplification of alcohol duty has been long overdue. The Treasury has been lobbied extensively by the alcohol industry to keep duty levels as they are, so this Budget is good news.
Duty has been frozen or cut for the past ten years despite the clear recommendation from the World Health Organization that increasing alcohol tax is a key way to reduce consumption and therefore reduce the number of people who lose their lives to alcohol.”
Dr Alastair MacGilchrist, Chair of Scottish Health Action on Alcohol Problems (SHAAP)
Alcohol Change UK also warmly welcomed the rise in alcohol duty. Commenting on the increase, Dr Richard Piper, CEO of Alcohol Change UK, said:
Despite intense lobbying from private interests, the Government has put the public finances – and the public’s health – first.
For too many years, alcohol duties have seen real terms cuts, leading to alcohol (an addictive and highly dangerous substance) becoming more and more affordable, which in turn leads to increased consumption and harm.
We now need the Government to make this a pattern, not a one-off, and to go further: to acknowledge that a decade of real terms cuts in alcohol duty has seriously eroded its value; and to reinstate the smart Alcohol Duty Escalator – introduced by Labour in 2008 and continued by the Coalition Government – which increases alcohol duty by 2% above inflation annually.”
Dr Richard Piper, CEO, Alcohol Change UK
Sources
The Independent: “Tax on beer frozen as part of Jeremy Hunt’s ‘Brexit pubs guarantee’“
The Guardian: “Alcohol duty increase ‘historic blow’ to wine and whisky industry”
IAS: “Alcohol duty to rise with inflation in August and draught relief increased“
UK Alcohol Health Alliance: “AHA responds to UK Government’s decision to increase most alcohol duty“
SHAAP: “SHAAP comments on Budget announcement on alcohol duty“
Alcohol Change UK: “Alcohol duty announcement welcomed“