Labour’s tax hikes lead to substantial losses in alcohol duty revenue
Labour’s tax increases have resulted in the UK Treasury experiencing over £100 million annually in lost alcohol duty, with spirits revenue alone down by £102 million compared to the previous year, reports BritPanorama.
The decline in revenue corresponds with wider trends in the alcohol industry, indicating that total income from alcohol duty for 2025/26 is projected to fall £1.1 billion short of initial forecasts by the Office for Budget Responsibility made in November 2023.
Spirits duty has seen an increase of more than 17% in recent years, which includes a 10.1% rise under the Conservatives and subsequent hikes since Labour’s election. This increase has put significant pressure on the spirits market, leading to expectations that revenue from products such as gin and whisky will be substantially lower than anticipated.
In November 2023, it was forecasted that spirits revenue would reach £5.1 billion in 2025/26; however, actual takings are now projected to amount to less than £4 billion this fiscal year.
Carolyn Harris MP, Chair of the All-Party Parliamentary Group for UK Spirits, commented, “Our spirits sector cannot survive if we continue to tax it into oblivion. This is a sector that has so much potential to deliver the growth that this country desperately needs.”
Harris further stated, “By hiking excise duty the Treasury is in fact losing money. It’s time to change approach, support distillers and the pubs and bars that depend on them and create jobs and opportunities around the country – which in turn will deliver more benefit for the Exchequer.”
Rupert Duke, spokesperson for the UK Spirits Alliance and Director of G&I Spirits Group, highlighted the dire situation, noting, “After consecutive duty hikes totalling 17%, distillers across the country are barely hanging on. Our international competitors are watching British spirits become less competitive with every day that passes. It’s time the Treasury went back to the drawing board and found a way to raise revenue and help businesses like ours.”
The developments indicate a crucial moment for the UK spirits industry, raising significant concerns about the viability of the sector under current tax structures. The situation underscores the broader implications of government fiscal policy on business health and economic growth.
