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Health groups warn against calls to scrap UK duty escalator

Health groups in the UK have warned the government there about the possible consequences of any attempt to lift the tax escalator on beer, wine and spirits in this year’s Budget, describing any such moves to lift the annual excise hike as “madness”.

 

Leading health bodies such as the Royal College of Physicians, the British Medical Association and the charity Alcohol Concern – part of the Alcohol Health Alliance – have called on UK Chancellor George Osborne to continue the duty escalator on alcohol. This puts up the excise on alcohol by inflation-plus-2% each year.

The recent call from some sections of the alcohol industry to scrap the escalator was criticised in a letter to the Chancellor signed by 24 members of the Alliance.

The letter stated that freezing duty increases on beer, wine and spirits would “unfairly increase the burden on the public purse and put even more pressure on public services and frontline workers”.
In the letter the Alliance argues that reducing the affordability of alcohol is internationally recognised as one of the most effective ways of addressing alcohol harm.

“Alcohol is 61% more affordable than it was in 1980 and in the UK alcohol affordability has increased significantly more than most other EU countries in recent years,” states the missive, adding that, “UK wine and spirits consumption is at record levels and among young women aged 16-24 the proportion of spirits drinkers is now larger than any other demographic group.”

The annual duty escalator has been in place since 2008 although it was lifted for the first time for beer last year.

The letter to the Chancellor follows calls by organisations such as the Wine & Spirit Trade Association for an end to the duty escalator where it has claimed that UK duty plus VAT now accounts for 79% of the average price of a bottle of spirit and 57% of a bottle of wine.

The WSTA’s Chief Executive Miles Beale explained, “Most responsible consumers would be outraged to learn that since the alcohol duty escalator was introduced in 2008, tax on wine has increased by 50% and on spirits by 44%.

“Independent research from Ernst and Young has found that if the Chancellor scraps the escalator in his upcoming Budget this would boost public finances by £230 million in 2014 alone and create more than 6,000 jobs.

“Scrapping the escalator would also help pubs, given wine and spirits sales account for 42% of the value of alcohol products sold in pubs, bars and restaurants.”

He was joined in the call to scrap the escalator by other industry organisations such as the British Beer and Pub Association.

The BBPA’s Chief Executive Brigid Simmonds stated, “The escalator has already been abolished for beer and rightly so as the Government has acknowledged this is vital for pubs.

“If the Chancellor wants the most ‘bang for his buck’, action on beer duty should be the top priority as it delivers the greatest possible support to pubs and secures vital jobs. This is because beer sales account for 66% of pub sales compared to wine (12%) and spirits (13%).

“And this is before even considering the British beer supply chain which from barley and hop growers to maltsters and brewers, is very largely a UK-based industry, with a huge impact on UK jobs.”

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