The Scotch whisky industry has reacted after chancellor Rachel Reeves announced her first UK budget since the Labour Party came into government earlier in 2024.
Reeves announced that duty on alcohol would rise in line with the Retail Price Index from February 2025. An exception will be made to products on draught in on-trade venues like pubs and bars, which will have duty on cut by 1.7 per cent.
The Scotch Whisky Association (SWA) has criticised the government's decision, saying it represents a broken commitment after Keir Starmer claimed last year that his government’s trade strategy would “back Scotch producers to the hilt”. The SWA has previously called for reduction in duty on Scotch whisky after it was increased by 10.1 per cent in 2023 by then-chancellor Jeremy Hunt.
SWA chief executive Mark Kent described the tax hike as a "hammer blow" to the industry. He commented: “On the back of the 10.1 per cent duty increase last year, which led to a reduction in revenue for HM Treasury, this tax hike serves no economic purpose. It will damage the Scotch whisky industry, the Scottish economy, and undermines Labour’s commitment to promote ‘Brand Scotland’. [Reeves] has also increased the tax discrimination of spirits in the Treasury’s warped duty system, and with 70 per cent of UK spirits produced in Scotland, that will do further damage to a key Scottish sector.
“The disastrous 10.1 per cent duty hike last year has now been compounded. This further tax rise means the lessons have not been learned, and the chancellor has chosen continuity with her predecessor, not change. We urge all MPs who support Scotch Whisky to vote against this duty hike and tax discrimination of Scotland’s national drink.”
The increased duty is expected to raise the minimum tax burden on a bottle of Scotch whisky above £12 for the the first time.
Nuno Teles, managing director of spirits giant Diageo GB, said he was "deeply disappointed" by the outcome. He continued: "On the campaign trail, Keir Starmer pledged to ‘back the Scotch whisky industry to the hilt’. Instead, the Government has broken this promise and slammed even more duty on spirits.
"This betrayal will leave a bitter taste for drinkers and pubs, while jeopardising jobs and investment across Scotland."
Simon Shelbourn, chief financial officer for drinks company Kingsland Drinks, said: “Further taxing non-draft alcohol hurts everyone; whilst the government is working hard to plug the hole in the country’s finances, the consumer is being further penalised despite already bearing the weight of the cost-of-living crisis, and much of the drinks industry will once again have to prove its resilience despite being positioned to drive economic growth.
“The move is damaging to the industry and a setback to firms across the board who have worked tirelessly in recent years to withstand relentless taxation in the toughest of trading conditions.”