Budget review: A ‘horrific’ state of affairs for the trade

By Jo Gilbert

Published: 31 October, 2024

An outcry has erupted from the trade following yesterday’s Autumn Budget, which led to disappointment on many fronts, including a measly 1p off draught beer, further rises to duty for wine and a lowered rate of business rates relief which has been described a kick in the teeth to businesses.

“Bitter disappointment” and “horrific” are just some of the reactions to the first Labour Budget in over a decade, which saw the government decide to raise alcohol duty by 2.7% in line with Retail Price Inflation.

Set against the new incremental duty escalator, which arrives in February, this means the current rate per litre of alcohol will rise from £29.54 to £28.50 for products between 8.5% and 22% abv.

Read more: Budget sparks criticism with new alcohol duty reforms

Business rates relief took a battering too. Hospitality, retail and leisure businesses currently have 75% relief for the financial year 2024/25. This will drop to 40% for 2025/26.

Coupled with a rising National Living Wage and an upcoming National Insurance increase, the result is what UK Hospitality chief Kate Nicholls called a “tsunami of employment costs” for the sector in 2025.

Employer National Insurance will rise to 15%, up by 1.25 percentage points from April next year in a budget which included £40 billion in tax rises.

Speaking of the situation with duty, Emma Campbell, PR and marketing manager at Lanchester Wines, said: “This is horrific, it could increase the price of a 14% wine by £1 a bottle, purely on duty. I’m not sure how many customers understand this.”

A mere ‘penny off a pint’ has added insult to injury to many who were hoping for a permanent continuation of the duty easement period, which will now add significantly more to the price of wine when the duty escalator kicks in next year. Businesses will be required to calculate rates at every 0.5% abv, adding to both products and administration costs.

The reduction 1p for draught products will provide little comfort to on-trade businesses which are closing at an unprecedented rate.

Recent findings from accountancy firm Price Bailey indicate that more than 11% of UK pubs are at imminent risk of closure. Around 7,500 pubs are currently operating with negative net assets, making them technically insolvent.

As Megha Khanna, owner of London-based Gladstone Arms said: “Pubs are more than just pints and the increase in alcohol duty on spirits will cause more damage to a sector that’s already struggling.”

Among the most deflating aspects of yesterday’s Budget was no mention of the scheduled end of the duty easement in February. Chancellor Rachel Reeves failed to reverse the changes devised by the Conservative government, which have drawn widespread criticism for being unnecessary and costly.

“In doing so, the government has not only wasted a golden opportunity to reverse the mistakes of the previous administration but has effectively reneged on its pledge to unlock growth and remove red tape for business, failing more than 1,000 small, independent wine merchants across the UK,” Majestic CEO John Colley said.

“This ill-conceived policy will not only have a negative impact on consumers and wine businesses, but on duty receipts at a time when the Treasury is trying to fill a black hole in the country’s finances.”

As businesses look ahead to a challenging 2025, it is difficult not to compare Labour’s plan for boosting economic growth to a broader economic view.

Speaking of the complex situation, Michael Saunders, CEO of Coterie Holdings, told Harpers: “Having been travelling across Asia recently, they are leading the charge in the hospitality industry’s recovery and setting a stretching growth trajectory for the region, with private and public investment, encouraging travellers with new and personalised concepts and experiences, attracting some of the world’s best and renowned operators to the region.”

He underscored the point by adding: “Surely we can do better in the UK.”

Product Modelling for Wine (WSTA): 11.5-14.5%

New Rates from 1 February 2025 to incorporate the withdrawal of the temporary easement (Uprated by 3.65%, the forecast RPI rate for Q2 2025)

Wine % abv	Duty per bottle now £	Duty per bottle from 01/02/25	Difference £	Difference %
11.0	£2.35	£2.43	£0.09	3.6
11.5	£2.67	£2.54	-£0.12	-5
12.0	£2.67	£2.65	-£0.01	-0
12.5	£2.67	£2.76	£0.10	4
13.0	£2.67	£2.88	£0.21	8
13.5	£2.67	£2.99	£0.32	12
14.0	£2.67	£3.10	£0.43	16
14.5	£2.67	£3.21	£0.54	20
15.0	£3.21	£3.32	£0.11	4

750ml

Products Comparison:

	Current Duty	Duty per bottle from 01/02/2025	Difference	% Change
Vodka 37.5% abv 70cl	£8.30	£8.60	£0.30	4
Gin at 40% 70cl	£8.85	£9.18	£0.32	4
Sparkling Wine 12% abv 75cl	£2.67	£2.65	-£0.01	-0
Still Wine 14.5% abv 75cl	£2.67	£3.21	£0.54	20
Sherry 15% abv 75cl	£3.20	£3.32	£0.12	4
Port 20% abv 75 cl	£4.27	£4.43	£0.16	4
spirit-based Cream Liqueur 17% abv 70cl	£3.39	£3.51	£0.12	4
Pre-Mixed G&T 5% abv 250 ml	£0.31	£0.32	£0.01	4
440 ml can cider 4.5% off trade	£0.19	£0.19	£0.01	4
pint cider 4.5% on-trade (draught)	£0.22	£0.22	-£0.00	-2
440ml can beer 4.5% off trade	£0.41	£0.43	£0.02	4
pint beer 4.5% on trade (draught)	£0.48	£0.48	-£0.01	-1