The 2018 budget has disappointed health groups by freezing beer and spirit duties, though wine duty is set to rise in line with inflation. Most cider duties are frozen though a new duty band for cider at 6.9% to 7.5% will come into effect in February 2019 seeking to target infamous 'white ciders', though already questions have been raised about the likely impact.
In the run up to the budget we reported on the recent campaigns and lobbying activity seeking to influence alcohol duty decisions, including a £9 million 'Long live the Local' campaign calling for a cut in beer duty. However claims that beer duty cuts would help save pubs are contested given they may further increase the price gap between the on-trade and supermarkets. Health groups of course had been calling for rises to alcohol duties as both a possible consumption policy lever but also to help fund depleted alcohol treatment services.
Responding the announcement, Professor Sir Ian Gilmore, Chair of the Alcohol Health Alliance, said the decision was effectively a cut to alcohol duties and reflected a "missed opportunity" to better fund public services and protect the most vulnerable. Cuts to duty since 2013 had also cost the treasury £4bn and would cost another £5bn by 2023. "With 65 people dying every day from alcohol-related causes, there’s an urgent need for Government to take action on cheap alcohol" Gilmore said.
Alcohol Concern tweeted its disappointment and that is hoped the Government would "find another way to address the urgent crisis in alcohol treatment funding". Writing in a blog post in reaction to the Budget, Dr James Nicholls described it as a "missed opportunity", arguing "Most local authorities don’t even have a fraction of £9 million the alcohol industry has spent lobbying to spend on supporting some of the most vulnerable in their community, on whom the alcohol industry relies for their profits."
According to Harpers, the cost of a bottle of spirits will be 30p less and 2p lower for a pint than if duty had been set to rise with inflation. Last year's budget saw duty rises in line with inflation. The British Beer and Pub Association (BBPA) welcomed the news, with Chief Exec Brigid Simmonds stating the beer freeze was "a big step in the right direction and a huge help for pubs across the UK that are struggling", and that it will "save brewers, pubs and pub-goers £110 million and secure upwards of 3,000 jobs that would have been lost had beer duty gone up."
The BBPA's claims about duty and the impact on jobs have however been previously been contested, including by sections of the beer and pub industry. The Wine and Spirit Trade Association (WSTA), which had also campaigned for duty freezes, welcomed the news on spirits but described the inflation level rise on wine as "hammer blow to the wine trade" and "grossly unfair, unjustified and counterproductive".
The Treasury's forecast [pdf] estimate the impact on the Exchequer will be a loss of £185 million by 2024. The rise in cider duty will apply to still ciders between 6.9% and 7.5% ABV and follows a consultation announced in last year's budget. However the Institute of Alcohol Studies (IAS) says that it it will mean duty "will rise by a mere 0.1 pence per unit at the low end (from 5.4p to 5.5p) and 1.4 pence per unit at the top end (from 5.4p to 6.8p)". A Twitter thread by Colin Angus has some visualisations highlighting the limited likely effect, also pointing out that the change equates to 30p on the cost of a 3 litre bottle of Frosty Jacks, and reformulation by producers are also unlikely to have significant effect on the originally stated aims.
Pricing still out of favour as a policy lever
Regular readers will know well of ongoing calls by health groups and others for the Government to make use of pricing measures as a lever for alcohol harm, and indeed of Westminster's reluctance bar a brief period in 2012. Earlier this month a new Alcohol Charter was released calling for the forthcoming national alcohol strategy to reflect the PHE evidence review for reducing alcohol harm, which highlighted the role of price as a key policy.
However minimum pricing already appears to be off the table according to a recent parliamentary answer stating "the new strategy will not include a commitment to introduce minimum unit pricing in England at this time", but that PHE would review the impact in Scotland following its introduction this year. Meanwhile Wales and Ireland are taking steps to implement MUP with a 50 pence MUP expected to be introduced in Wales in 2019 following a further consultation. For the meantime though, regular calls and campaigning of alcohol duty rates look set to continue, with further scope for changes to alcohol duty structures posed by Brexit.
Here is the effect of the budget on alcohol duty rates, in graph form.
— Colin Angus (@VictimOfMaths) October 29, 2018
Spot the difference... pic.twitter.com/gjtyLQCFls
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