The UK’s Coalition Government is showing every sign of being stumped by the country’s love affair with the bottle, not that the industry is complaining too much.
This week, the Government has published its long-awaited review of alcohol taxation. After months of pouring over the fine details of duty bands, ministers have decided to do, well, not much, actually.
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Beers above 7.5% abv will be subject to a super tax, while those with an alcohol content of less than 2.8% will qualify for reduced duty. This great shift in tax strategy will affect less than 2% of beers sold in the UK. Wine and spirits producers have been left alone.
Faced with a lobbying onslaught from different areas of the industry, not to mention pressure from health groups and police, ministers appear unable to find a way through. It’s not only taxation; the Government looks to be bogged down on other alcohol policy issues, too.
Yesterday, it reiterated that it would bring in a ban on sales of alcohol ‘below cost’ “without delay”. The problem is, ministers have yet to detail what ‘below cost’ actually means. It looks as if the definition is moving towards the sum of duty tax plus value added tax, which many parts of the drinks industry are quite pleased about. That’s essentially because it will hardly touch prices, as the head of the industry’s self-regulatory body, The Portman Group, said earlier this year. However, it’s the simplest method of implementing the policy.
Today, the Government promised to introduce a late-night levy on licensed outlets. But, again, we don’t know much about the mechanics of this. Local authorities look set to gain relatively large scope to interpret the new licensing laws as they see fit.
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By GlobalDataBefore the Conservative Party came to power as the lead Coalition partner, some in the drinks sector quietly dismissed its grand plans for alcohol as unworkable. Following a barrage of lobbying, counter-lobbying and evidence-based studies from all sides, the Conservatives have since set about proving that pre-election hypothesis correct.
The Coalition Government has sunk into the same quagmire as its predecessor did on alcohol. For the Conservatives, in particular, alcohol policy ties the party in knots by forcing it to balance traditional principles of going easy on regulation and going tough on crime and disorder.
There is some frustration in the drinks industry at the lack of action on tax. The Scotch Whisky Association lamented that the tax review is a “missed opportunity” to change the tax regime, while the British Beer & Pub Association was guarded in its praise for a tax reduction only on beers below 2.8% – apparently, there are some, somewhere. There is also growing anger in part of the BBPA and the on-trade at the failure to deal swiftly with discount drinks offers in supermarkets.
Nevertheless, most corners of the drinks sector remain reluctant to hammer the Government. Memories of its predecessor still burn brightly and the sector sees the current administration as much more amenable to its point of view. In particular, it is much less prone to press the big red button of regulation. Witness the Responsibility Deal on alcohol, a partnership between Government and industry that is set to be unveiled in January and will detail strategies to promote responsible drinking.
The Government has spent months huffing and puffing on alcohol. But, in the end, perhaps it has realised what those before it came to understand: that there is no easy answer. For the industry, that’s a positive.
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