By Peter Adams, Editor, CLH News
As February 1st arrives, so does yet another hammer blow to the UK’s struggling hospitality and licensed on-trade sector. The latest alcohol duty tax hike is yet another example of a government seemingly determined to tax businesses into closure.
The industry, already reeling under the weight of successive cost increases, is now forced to absorb yet more pain.
The UK already holds the dubious honour of having the highest duty on Scotch Whisky among G7 nations, the second highest alcohol duty in Europe, and among the highest wine taxes in the world.
The impact of these excessive tax rates has been clear: declining sales, increasing inflation, and now, according to the government’s own figures, a catastrophic loss in revenue.
The Scotch Whisky Association (SWA) has reported that since excise duty on Scotch Whisky and other spirits was increased by 10.1% in August 2023, the Treasury has been losing half a million pounds a day in tax revenue. HMRC figures reveal that revenue from spirits duty fell by a staggering £255 million between 1 August 2023 and 30 November 2024, compared to the same period the previous year. That’s a jaw-dropping £305 a minute in lost revenue for the Treasury.
Mark Kent, Chief Executive of the SWA, said it best:
“Yet again the industry has been proved right about how hiking tax rates leads to less revenue and stalls growth. We are not crying wolf – HM Treasury needs to understand that even this resilient industry cannot be stretched beyond breaking point.” And he’s absolutely right. This is no longer just an industry complaint; it is a reality backed by the government’s own numbers.
The Chancellor’s approach is reminiscent of King Canute trying to command the tide—no matter what she does, the inevitable will happen: both sales and tax revenues will continue to fall.
What is most frustrating is the government’s sheer tone-deafness to the crisis unfolding before them.
The resignation of Manchester’s night-time economy czar, Sacha Lord, is a blow to the sector. Like many of us, he speaks plainly and truthfully about the dire state of the industry.
He has been an outspoken critic of this and previous government policies and a fierce advocate for the hospitality trade. We can only hope that his influence remains strong, even outside of his official role.
The figures don’t lie. This country, and this sector, simply cannot afford additional costs and taxes that do not generate additional revenue.
10% of something is better than 20% of nothing. The government must wake up to this reality before the damage becomes irreversible.
On a brighter note, the Six Nations kicks off tonight, offering a much-needed boost to the on-trade. Nationwide pub chain Social Pub and Kitchen expects to sell 130,000 pints of Guinness during the tournament—an average of 8,700 per match. Technology provider Zonal has revealed that pub and bar bookings for match times are up an impressive 38% compared to last year.
I can always be contacted at edit@catererlicensee.com