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In the UK, the chancellor has delivered his annual budget statement, which sets out the government’s spending plan for the half-year ahead. It includes an increase to most alcohol duty and confirmation that the proposed sugar tax would go ahead – albeit bringing in £280 million less over the course of this parliament than initially expected. FoodBev has compiled the thoughts of some of the industry’s leading thinkers about what the budget will mean for them.
What the politicians said
Chancellor of the Exchequer
“Unusually for a chancellor, I am delighted to announce a reduction in the expected yield of a tax – the soft drinks levy. I can confirm today the final rates of £0.18 and £0.24 per litre for the main and higher bands respectively. But producers are already reformulating sugar out of their drinks, which means a lower revenue forecast for this tax. This is good news for our children.”
“This was a budget of utter complacency. The chancellor made his boasts about a strong economy, but who is reaping the rewards of this economy? For millions it is simply not working. The chief executives of big companies [are] now paid 180 times more than the average worker and taxed less. The big corporations [are] making higher profits and being taxed less. All this adds up to £70 billion of tax giveaways over the next five years to those who need it the least. This government is the government with the wrong priorities.”
Leader of the opposition
The sugar tax
The chancellor confirmed that a levy on sugar-sweetened beverages would go ahead as planned next year with the same rateable tax bands – one for drinks with more than 5g of sugar per 100ml, and a higher band for those with at least 8g. But the tax will take in less than first projected and cause the British taxpayer to be almost £250 million out of pocket during this parliament, which has some concerned.
British Soft Drinks Association
“Given current increases in cost of goods, we’re surprised the Treasury wishes to put more pressure on businesses and raise prices for hard-pressed consumers. It’s also ironic that the tax hits the soft drinks category, which has led the way in helping consumers reduce sugar intake – down nearly 18% since 2012. We are also the only sector with a calorie reduction target for 2020.
“We support the need to address the public health challenge the country faces, but it’s worth bearing in mind that there is no evidence taxing a single product or ingredient has reduced levels of obesity anywhere in the world.”
Consultancy firm Ayming
“The sugar tax has been hotly debated since its announcement last March, but now that the government has confirmed the levy it should lead to a surge in investment in innovation over the next two years. Soft drink manufacturers will be seeking to achieve the same level of taste whilst reducing the sugar content of their drinks to below the taxable threshold.
“Despite lobbying, the sugar tax has been in the works for some time now, so it shouldn’t come as complete surprise to soft drink manufacturers. Although this levy will undoubtedly cost these businesses money, they should still be able to claim back a high proportion of what they spend on developing new soft drink products through the UK R&D tax incentive. The scope of the incentive is relatively broad for innovative companies, with costs for improving the performance of manufacturing equipment and methodologies, and even packaging developments, all potentially qualifying under the R&D tax incentive.”
An increase in excise duty on the price of most spirits has ruffled feathers – particularly in the Scotch whisky industry, where distillers already felt hard done by. Almost 80% of the price of a bottle of whisky will now be tax.
Diageo Great Britain
“Today’s tax blow from the chancellor is bad for the economy, bad for business and bad for the British public. It is staggering that the prime minister stood up in Scotland only on Friday and said that Scotch whisky is ‘a truly great Scottish and British industry… and directly supports tens of thousands of jobs’, and just five days later her chancellor hammers this industry at home. Tax on Scotch whisky is now so high – nearly 80% of the price of an average bottle will go straight to the government. We believe this duty rate increase will reduce total tax revenue. We are calling on the government to reverse this punitive tax hike and fundamentally overhaul what is clearly a flawed excise duty system.”
Scotch Whisky Association
“A nearly 4% duty rise and a 79% tax burden on a bottle of whisky is a major blow, reversing recent progress. Distillers will find it hard to understand why the chancellor is penalising a strategically important British industry with this tax increase.
“At a time when government should be supporting a key home-grown sector, we face a damaging tax rise on top of the uncertainties of Brexit. Looking to the autumn budget, we will be arguing strongly that it is time for a new approach to excise duty outside the constraints of EU excise law. The system is in need of a fundamental review and reform to make it fair and competitive.”
Miles Beale, chief executive of the Wine & Spirit Trade Association, was concerned about the effect of increase duty on the wine category.
Wine & Spirit Trade Association
“It is disappointing that the chancellor has failed to support a great British industry. He has increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses.
“Between Brexit’s impact on the pound and rising inflation the wine and spirit businesses face a tough trading landscape. This is a missed opportunity to back British business and help out struggling consumers.
“The added uncertainty of another budget in six months’ time is unwelcome and will further undermine business – and consumer – confidence. At least there is some sign that Philip Hammond cares about levelling the playing field. It is important that he treated all alcohol products equally. It is welcome news that he has introduced a consultation on wine and made wine between 5.5 and 8.5% – a category which holds a great deal of potential for innovation, especially for lower ABV products.”
Innis & Gunn
“We welcomed the freeze in beer duty last year and we were hoping for a similar positive incentive from the chancellor this time around. It is incredibly disappointing to see an increase in alcohol duty in the latest budget; consumers are going to be hit hardest by this rise and I fear for the impact it will have on pubs already facing enormous pressures.
“We’re in the middle of a beer boom in Scotland, with over 100 active breweries for the first time in over a century; we have recently invested over £750,000 in increasing capacity at our own brewery, and the government should be doing all that it can to support our industry.”
The boss of Aston Manor Cider is more concerned by the potential for an increased rate of tax on so-called ‘white cider’ – a higher-strength version of cider with upwards of 7.5% alcohol and often made from fewer apples than the regular kind of cider.
Aston Manor Cider
“We are very surprised that in the detail of the budget statement there is mention of a plan to consult on a new duty rate ‘to target white cider’. We often point to the inaccurate mythology that exists around white cider and we are disappointed that this announcement has been made without evidence. It is perhaps the first time a chancellor has signaled the intent to use tax to address a public policy concern on alcohol.”
The chancellor also announced measures to help Britain’s struggling pubs, widely welcomed by the industry.
Campaign for Real Ale (Camra)
“We are delighted that the government has recognised the vital role that pubs play both in our local communities and our economy by introducing a new rate relief specifically for pubs in England.
“The announcement of a new rate relief for pubs in England is a ground-breaking step which recognises both the importance of pubs and the unfair impact of the business rate system on pubs. This new relief offers huge assistance to pubs and is a step towards Camra’s ambition of securing a £5,000 rate relief reduction for all pubs.
Property consultancy Bruton Knowles
“Landlords will be raising a glass to the chancellor following the government’s pledge to support British pubs as part of today’s budget announcement. Although our economy appears to be much stronger, many pubs are either still suffering from previous years’ uncertainty, or, as in many cases, have had to close their doors permanently.
“Government has pledged to offer a £1,000 discount to pubs with a rateable value of less than £100,000 to help protect them against increased business rates – which will be available to almost 90% of pubs. We are pleased money has been set aside for this industry. It is encouraging that government recognises the importance of pubs in the rural economy as they are often the hub of local villages and towns.”
But many, including Society of Independent Brewers (Siba) managing director Mike Benner, feel that the news is bittersweet given that consumers will be paying more for the price of a pint once they’re in a pub.
Society of Independent Brewers (Siba)
“The £1,000 reduction in business rates for pubs with a rateable value below £100,000 is welcome support for the sector, although much more needs to be done, but this contrasts sharply with the £0.02 increase on beer tax which is a blow for the millions of people who enjoy a pint of British beer in their local pub and also for Britain’s 1,800 small brewing businesses across the country.
“We called for local brewers and community pubs to be supported with a cut in beer duty to build confidence, enable investment and create jobs in light of increasing costs and uncertainty, but the chancellor’s decision will be a setback.”
The final word goes to Adrian Colman from Wincanton, who was heartened by the chancellor’s announcement of investment for the disruptive technologies industry. Colman said that it was good news for the country’s economy.
“The additional £270 million announced to support autonomous vehicles, robotics and artificial intelligence research is a welcome move by the government to keep the UK at the forefront of disruptive technologies. We’re already seeing the potential of these technologies to raise productivity across the supply chain.”
© FoodBev Media Ltd 2018