Rachel Reeves issuedwarning after ‘catastrophic’ tax raid sparks crisis | Politics | News
Chancellor Rachel Reeves has been warned that the Treasury’s tax raid on distilleries is making both the country and the UK’s whiskey and spirits industry worse off. The industry has sent out an SOS, warning that a “catastrophic” 17% increase in alcoholic drinks duty over the last three years has led to a £94 million drop in tax revenue in 2025-26. Labor MP Carolyn Harris, who chairs the all-party parliamentary group on UK Spirits, warned that Britain risks “plunging the spirits industry into oblivion”. He said the duty increases were “causing the Treasury to lose money”, which was “the exact opposite of what was intended and it is time to change course”.
Distillers and MPs from across Britain are calling for changes to prevent further damage to the industry, saying revenues are £1.1 billion lower than expected when a new alcohol tax system is introduced in 2023. Braden Saunders, founder of Doghouse Distillery in Battersea, London, warned that the UK capital has “one of the most exciting spirits scenes in the world” but that “this success story is slowly starting to fade away”.
He said the fall in incomes should be a “moment of reckoning”, adding: “The government has the opportunity to examine the evidence clearly and accept that the current approach does not work for anyone.”
Trade bodies including the UK Spirits Alliance, Scotch Whiskey Association, English Whiskey Guild and Gin Guild have issued a joint warning, saying it is “critical” that the Treasury does not “ignore” the impact of a “punitive and distorting tax rate” that has led to “job losses and investment pauses”.
They say: “A spirits tax represents a supertax on the industry and needs to be addressed urgently. Pubs and the wider hospitality industry cannot survive on beer alone, but hard-pressed consumers are being forced to pay for the possibility of responsibly enjoying the premium spirits that underpin the profitability of many bars, pubs and restaurants.”
Conservative MP Joe Robertson said: “I have spoken to proud business owners who say their success has been completely undermined under the current duty system. Falling incomes should be a wake-up call for everyone.”
Liberal Democrat MP Wendy Chamberlain, who chairs the all-party parliamentary group on Scotch Whiskey, said: “This year’s promised review of the alcohol duty system is an opportunity to address the roots of the Treasury deficit, ensure spirits are not discriminated against against other categories of alcohol and support Scotch Whiskey producers in their home markets.”
Shadow Chancellor Sir Mel Stride said: “Rachel Reeves’s tax rises are crippling our economy, damaging growth and leaving everyone worse off. You can’t tax your way to growth.”
A Treasury spokesman said: “We have kept alcohol tax rates constant in real terms to support public health and the public finances. The Office for Budget Responsibility’s latest forecast expects alcohol tax revenues to rise.”
The Treasury argues there are several possible reasons for the decline in alcohol consumption, including “increased moderation among consumers”.
