CHEERS TO THAT
Alcohol price rise decision confirmed in Spring Statement
Read below to find out the latest on alcohol taxes
PUB landlords and drinkers were spared extra misery yesterday in the Spring Statement as Rachel Reeves didn't raise alcohol duties.
However, this offers little respite for the industry, which continues to grapple with a slew of new financial pressures, including a rise in employee National Insurance contributions and fresh charges on waste packaging.
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The Chancellor's financial update stopped short of introducing any significant tax hikes, including an increase to alcohol duty.
Instead Rachel Reeves focused on cuts to welfare spending.
She said: "If you can work, you should work...
"One in 8 young people are not in employment, education or training.
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"If we do nothing, that means we are writing off an entire generation. That cannot be right.
"It is a waste of their potential and it is a waste of their futures."
Key announcements in the Spring Statement:
- No new tax rises: The Chancellor ruled out further tax hikes and pledged to crack down on tax avoidance, aiming to raise an extra £1bn.
- Growth downgraded for 2025: The OBR halved its GDP growth forecast for next year from 2% to just 1%.
- Growth boost from planning reforms: New housing policies expected to raise GDP by 0.6 per cent over the next decade.
- House building surge: 1.3 million homes expected over five years, with construction hitting a 40-year high.
- £2.2bn extra for defence: Additional funding confirmed to help meet the 2.5 per cent of GDP defence target.
- £400m Defence Innovation Fund: Backing new tech like drones and AI for the front line.
- Welfare shake-up: Targeted employment support and welfare reform to reduce benefit spending.
- Civil service cuts: New voluntary exit schemes and AI tools to shrink Government.
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Decisions on alcohol duty are more likely to be seen at the Budget in the Autumn.
Alcohol duty is charged on all drinks with an alcohol by volume (ABV) strength exceeding 1.2%, either at the point of production or upon importation.
These widely unpopular levies typically increase annually in line with inflation, as they did in February.
This has put pressure on booze firms, pubs and retailers to increase prices.
And new recycling fees for packaging waste which come in next month have added to the issue.
Miles Beale, chief executive of the WSTA, said: "The Government continues to claim that these tax hikes are part of their grand plan to fill the black hole in public finances, but a series of record-breaking duty increases is having the opposite effect.
"There are no winners under the UK's punitive alcohol tax regime —higher duty rates mean consumers buy less, leading to reduced revenue for the Exchequer.
Where to Find the Cheapest Pint in Britain!
"Meanwhile, businesses are being squeezed, and consumers are left facing ever-rising costs."
What's happened to alcohol duties?
Hated alcohol levies last rose in line with RPI inflation on Saturday, February 1.
Spirits like gin and vodka saw a 3.6% price rise, adding roughly 30p to a bottle.
The duty on fortified wines like port and sherry increased by 3.6%.
However, sparkling wine duty decreased slightly, by 1p per bottle.
Beer and cider on draught benefited from a 1.7% duty cut, while duty on other formats rose 3.6%, and pre-mixed drinks saw a 3.6% increase.
However, wine was the hardest hit, with a 20.2% duty increase on a bottle of 14.5% ABV wine, adding 54p.
This is because the Government introduced a new system which taxes wine by strength.
Wines between 11% and 12.5% ABV saw small duty fluctuations, either slightly increasing or decreasing.
However, for wines stronger than 12.5% ABV, duty increased substantially, with the largest increases impacting higher strength wines.
This latest increases comes on top of previous duty hikes in August 2023, resulting in a whopping 98p total increase on a bottle of 14.5% ABV red wine in just 18 months.
What is the Spring Statement?
By Ryan Sabey, Deputy Political Editor:
Rachel Reeves is delivering the Spring Statement - nearly fifty years after the first such "mini-Budget" was delivered.
The statement, which over the years has been delivered in both autumn and Spring, was started in 1976 at the end of the year.
The law changed in 1975 to ensure there were two economic forecasts every year as opposition MPs and the public could keep track of government plans.
Rachel Reeves has insisted there will only be one major fiscal event each year with a Budget planned for the autumn - so no tax hikes or reductions this year.
Her Labour predecessor Gordon Brown held the Budget in the the autumn and each autumn he would deliver a Pre-Budget Report giving an update on the state of the country’s finances.
Fast forward to 2010 and George Osborne, Chancellor until 2016, set up the Office for Budget Responsibility, to provide an independent forecast.
They were also there to dissect the state of the economy - producing five-year forecasts twice a year.
But the OBR weren’t asked for a forecast by short-lived Prime Minister Liz Truss in 2022 despite their mini-Budget containing an array of tax cuts causing a market meltdown.
Pint prices will STILL rise
Industry experts have cautioned that the average price of a pint is set to exceed £5 for the first time next month.
Drinkers will face an average cost of £5.01 per pint — an increase of 21p — as landlords are forced to pass on the burden of soaring costs, driven by Labour's previous tax measures announced in the Autumn Budget.
These include a rise in the minimum wage, higher National Insurance bills for employers and a cut to business rates relief — slashing support from 75% to 40%.
The BBPA estimates they will cost the sector £650million, leaving many pubs with no choice but to raise prices.
Emma McClarkin, of the BBPA, said: "The cumulative impact of these taxes and regulations is now plain to see and it is highly unfortunate that the only way many pubs can remain viable is to pass on the array of upcoming costs to consumers.
"No one wants to see the cost of an average pint rise by a further 21p and break the £5 average pint barrier.
"It's more urgent than ever that the Government looks at ways to cap or reduce the costs of business so we can keep pubs open and make sure the price of a pint remains affordable."
The Sun's Save Our Sups campaign is calling on ministers to throw a lifeline to boozers.
Tim Black, of Frontier Economics, said: "The sector is at the sharp end of a wave of changes.
"The cumulative impact will be significant."
What else was said in the Spring Statement?
Elsewhere in the Spring Statement, Rachel Reeves confirmed a raft of benefit changes.
The changes were outlined last week when the Department for Work and Pensions (DWP) released its Pathways to Work green paper, but they have been confirmed today.
Ms Reeves said there would be additional reductions to Universal Credit's incapacity payments.
Existing claimants who have limited capability to work currently receive £416.19 per month in incapacity payments.
This will remain unchanged and frozen at this level until 2030.
But for all new claims from April 2026, the amount will be halved to £208.10 per month, or £50 per week.
This will be frozen until 2030.
Plus, the Chancellor confirmed millions of workers will get a pay rise of £1,400 a year from next week.
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The Government had announced in October it is hiking the National Living Wage by 6.7% from next Tuesday.
Ms Reeves confirmed three million people will get the pay boost from next week.
What does this Spring Statement mean for Rachel Reeves?
By Ryan Sabey, Deputy Political Editor
RACHEL Reeves is trying shift any blame away from herself and the Labour government as it grapples with the sluggish economy.
The Chancellor is telling MPs that the “world had changed” meaning she has to take drastic action when it comes to spending and welfare.
The trouble for Ms Reeves and Sir Keir Starmer is that they put growth as their “number one” mission and that, to put it mildly, is stalling.
The independent watchdog say growth forecasts has halved for this year and the financial headroom wiped out - hence the savings to be made elsewhere.
But for Ms Reeves all this puts her in a very tight spot insisting she will stick to her iron clad rules - with her looking to find up to £15 billion of savings.
The Tories and commentators are aiming their fire over how she hasn’t helped herself as growth has fallen.
They point out that she was the person who decided to go on a £40 billion tax raid at October’s Budget - with £25 billion of it falling on the shoulders of business.
The upcoming Donald Trump-led tariff war could easily throw the government off course again unless a limited trade deal can be struck.
Rachel Reeves will be pushing every leaver possible to get that over the line before it kicks in next week to give her some breathing space.
But we could be back at square one come the autumn with the Budget to balance the books - with speculation there could be tax rises and Whitehall departments scratching around for more savings.
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