Scotch Whisky Association anger over Chancellor's alcohol duty hike

The Scotch Whisky Association described it as an “unjustifiable” hike which would result in 75 per cent of the money spent on a bottle would go to the Treasury. 

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However, it was welcomed by the Scottish Health Action on Alcohol Problems charity, who described it as “good news” and said it would save lives. 

As well as announcing that “duties will go up in line with inflation in the usual way,” the Chancellor also announced a new “Brexit pubs guarantee” which would see the duty charged on a typical pint of beer in the pub to ensure it would always be lower than in the supermarket. 

The Treasury’s Budget documents also confirmed plans to reform alcohol duty which would see the tax rate rise in line with the alcohol volume. 

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The Scotch Whisky Association said the Chancellor had broken the government’s promise in 2019 to “ensure our tax system is supporting Scottish whisky.” 

They said the duty rate on spirits will rise to £31.64 per litre of pure alcohol, meaning that of the £15.22 average price of a bottle of Scotch Whisky, £11.40 is collected in taxation through duty and VAT. 

The association’s Chief Executive, Mark Kent said: “This is an historic blow to the Scotch Whisky industry. 

“The largest tax increase for decades means that 75% of the average priced bottle of Scotch Whisky will be collected in tax, reducing already tight margins for an industry which employs tens of thousands of people and invests hundreds of millions annually across the UK.   

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“In addition, the Chancellor has chosen to further increase the competitive disadvantage faced by the industry in the UK by giving additional tax breaks which are not available to the vast majority of distillers. 

“Spirits account for more than a third of hospitality sales, but the extension of ‘draught relief’ cuts out 99% of the spirits sector, alienating both producers and consumers who choose premium quality drinks.” 

He said it was the “wrong decision at the wrong time” and that it was “deeply disappointing that one of Scotland’s largest and longest-standing industries has been treated in this way.” 

He added: The industry continues to grapple with significant domestic headwinds, including the soaring cost of energy, intense pressure on the hospitality sector, and increasing regulatory burdens like the Deposit Return Scheme. 

“This tax hike just adds to the pressures on the sector and breaks the UK government’s commitment to support Scotch.” 

Nuno Teles, Managing Director of Diageo GB, urged Mr Hunt to rethink the hike.

He said: “Today’s decision is a hammer blow for pubs, drinkers and for Scotch, a UK homegrown industry supporting tens of thousands of jobs. We urge the Chancellor to reverse this punitive and inflationary tax hike.”

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Dr Alastair MacGilchrist, Chair of Scottish Health Action on Alcohol Problems said the reforms to duty were “long overdue.” 

“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. 

“Increasing duty in line with inflation will go some way to reversing the damage caused by keeping duty at historically low levels for such an extended period.

“Alcoholic drinks are not an essential product so arguments about the cost-of-living crisis are a red herring.

"Instead, the Treasury has chosen to focus on reducing costly harms caused by alcohol and at the same time raise money for the public purse which – if it wishes – can be used to offset some of the harms caused by alcohol, including investing in the NHS.”