Reproduced with permission from the Independent and Baroness Hayter.
Freezing and unfreezing planned rises in alcohol duty highlights the Government’s lack of consistency and the whisky industry’s bizarre economic claims.
So far this year, in sixty-eight responses to written Parliamentary Questions the UK Government has stated that – among other things – people are being supported during the cost-of-living crisis by alcohol duties being frozen. Not only is this short-sighted and symptomatic of the short-termism of public office, but it also highlights the lack of a plan to genuinely support people, as well as the control alcohol holds over our politics and economics.
Alcohol duty is supposed to increase each year in line with the Retail Price Index (RPI). Instead, over the last ten years it has either been frozen or cut, apart from in 2017/18. This means that it has become increasingly affordable. For instance, in real terms beer duty is 28% lower this year than it was in 2012 and wine duty is 13% lower.
This matters because when alcohol is more affordable it increases the rates of alcohol-related harm. Reducing its affordability is one of the main mechanisms to reduce harmful consumption, as the World Health Organization, public health advocates, and colleagues of mine in the House of Lords have said for years.
In then swept Liz Truss and Kwasi Kwarteng in September with their ‘mini-budget’, announcing that alcohol duties will be frozen again from February 2023. We know what then happened, fast-forward to now and almost everything in the mini-budget has been reversed, including the freezing of alcohol duty.
This is to be welcomed and many people, including some of my colleagues, have written to the Chancellor Jeremy Hunt to express their support. However, this flip-flopping of policy and lack of consistency points towards a number of worrying issues. Firstly, it’s important to point out that the reversal isn’t yet set in stone, and the Chancellor could always double U-turn in his 17 November Fiscal Event. As we know, a month is a long time in politics, especially in current British politics.
Secondly, it’s more than just an issue of individual policy U-turns. This is symptomatic of the short-termism of the UK parliamentary system. With only two years left until a general election, the Government has to play political games, which means it fails to focus on introducing, and sticking to, effective long-term policies. While these games are played, people continue to die from alcohol harm, and increasingly so; 2020 saw the highest number of alcohol-specific deaths on record.
Finally, the confusion and inconsistency emanating from the Government opens the door to those with a vested interest to influence politicians and policy. Bear in mind that alcohol duty should have increased every year in the last ten, yet has only increased once. One could say that the alcohol industry has been very fortunate. However if you heeded the Scotch Whisky Association (SWA), the Wine and Spirit Trade Association or the British Beer & Pub Association, you’d be forgiven for believing that any planned inflationary increase in alcohol duty would be their death knell.
One of the more bizarre claims by the SWA is that freezing alcohol duty brings in more revenue to the Treasury. This is based on discredited Laffer Curve arguments and cherry-picking of Government data. Add to that the SWA’s director of communications claiming that this will be the largest duty increase in 375 years, while conveniently pretending that inflation doesn’t exist, and the spread of misinformation becomes clearer.
After the disaster of the mini-budget and a fiscal blackhole of almost £40 billion, the Government is searching for ways to reduce this. It is shocking that even within this economic climate the alcohol industry is behaving in such a petulant way when this inflationary increase is supposed to happen every year.
Freezing alcohol duty has been shown to increase the number of alcohol-related hospitalisations, premature mortality and rates of alcohol-related crime. As a member of the Alcohol Harm Commission, I have been pushing for an increase in alcohol duty for many years to help stem this harm. People count on the Government to support them in times of crisis, and making a discretionary and harmful drug cheaper is clearly not the way to do that.
Just at the moment, when the Government says we will all have to pull together to get us out of a deeply dug hole, keeping us safer, healthier and less prone to accidents by increasing duty would both help the Government’s coffers but also the NHS, victims of domestic violence and general well-being. You know it makes sense.
I welcome the reversal of the freeze but I worry that the lack of long-term planning together with industry lobbying could undo any positive moves to reduce harm.
Written by Baroness Hayter of Kentish Town, Senior Labour Peer, House of Lords.
All IAS Blogposts are published with the permission of the author. The views expressed are solely the author’s own and do not necessarily represent the views of the Institute of Alcohol Studies.