Autumn Budget Submission 2025

Raising alcohol duty is identified as one of the most effective and cost-effective policies to tackle the exorbitant health and economic harms associated with alcohol consumption. With alcohol deaths at a record high in the UK and alcohol duty rates having fallen significantly in real terms over the past decade, it is crucial that fiscal levers are utilised to prevent harm and protect public finances.

At almost every fiscal event over the past decade, previous governments cut alcohol duty rates in real terms, with a cumulative cost to the Exchequer of £28.6 billion. We welcome the fact that the new government did not cut or freeze duty at last year’s Autumn Budget, breaking with this damaging trend. Previous decisions led to alcohol becoming increasingly affordable, which in turn has led to alcohol consumption steadily increasing since 2014 and alcohol-related deaths and diseases with it. The cost of alcohol harm to the UK economy is staggeringly high. A longer-term plan for alcohol duty that considers the system-wide implications for tax revenues, the economy, and health outcomes, should be introduced.

Alcohol duties are among the significant taxes that the government has not ruled out increasing, and the foregone revenue from alcohol duty over the past decade will have contributed to the current shortfall. Increasing alcohol duty would help reduce this in two clear ways: it would raise tax revenue for the government and it would improve economic productivity by reducing the health harms of alcohol. Recent comparative research across five European countries found a clear relationship between alcohol taxes and government revenue: tax increases consistently raised revenue, while tax cuts reduced it. This underlines that well-designed duty rises can deliver both fiscal and public health gains simultaneously. A modest alcohol duty escalator of 2% above inflation targeting non-draught alcohol could raise an additional £3.4 billion between 2025 and 2029, providing significant resources for public health investment.

While the 10 Year Health Plan set out important goals, it did not include the most effective evidence-based measures to reduce alcohol harm. This means that fiscal policy, including targeted duty measures, presents a clear and timely opportunity for the Treasury to make a meaningful impact on rising rates of alcohol harm. Setting duty rates that cover the cost of harm (or reintroducing the alcohol duty escalator) and equalising duty rates on cider with those on beer would deliver significant public health benefits, helping to reduce alcohol-related illness, deaths, and the wider social costs of harm. Equalisation would be consistent with the new alcohol duty approach that products with the same alcohol content should pay the same excise duty.

These fiscal measures would therefore support the new government’s health mission and its focus on prevention and reducing health inequalities, while also furthering the cross-governmental economic growth mission.  

IAS therefore makes the following recommendations to the Chancellor ahead of the Autumn Budget (detailed on page 12 of submission):

1. Contribute to the development of a cross-government alcohol strategy that supports the economic growth and health missions by raising alcohol duty.
2. Develop a mechanism that ensures alcohol duty rates cover the external cost of alcohol harm to society and incentivises alcohol producers to reduce harm – potentially by reintroducing the duty escalator.
3. At the same time support the on-trade and hospitality sector – and reduce home-drinking – by protecting draught relief.
4. Equalise cider duty rates with that of beer of the same strength (ABV).