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- I beg to move,That this House has considered the impact of alcohol duty on the UK wine sector.It is a pleasure to serve under your chairmanship, Mr Turner. I am grateful to colleagues for attending this evening’s debate. A bit of background and heritage: the United Kingdom has long been a global hub for beers, wines and spirits. Dating back to 1698, with the founding of Berry Bros. & Rudd, we are the largest exporter of spirits in the world and the second largest importer of wine by both volume and value. The sector represents some of the very best of British enterprise: from heritage distillers to pioneering new producers who continue to innovate and support our economy. Behind every bottle on the shelf is a small family business, a logistics worker or a hospitality employee whose livelihood depends on the trade.Each year, the United Kingdom imports the equivalent of 1.7 billion bottles of wine, accounting for 99% of all wine consumed here. This vibrant culture of responsible enjoyment sustains our high streets, supports independent retailers and provides essential income for pubs and restaurants that continue to face difficult trading conditions. In 2024, more than £12 billion was paid to the Treasury in alcohol duty, with wines and spirits contributing £8.5 billion—around 70% of that total. The wider wine and spirits sector generated more than £76 billion in economic activity in 2022, supported £22 billion in gross value added and sustained more than 400,000 jobs.However, when more than 60% of the cost of a bottle of wine is tax, we must ask who is truly being squeezed—the consumer, the publican or the common sense of good economic policy? The reality is that the margins for producers and retailers are tightening. There is a limit to what the British public are willing to pay before they simply choose to stay at home. Changes in duty directly alter prices on the shelf and on restaurant wine lists. Every percentage point of duty may appear small in Whitehall, but for many businesses, it is the difference between survival and closure. Treasury Wine Estates, the producer of brands such as 19 Crimes and Penfolds, has warned that further tax increases will deepen pressure on hospitality. Its managing director of global premium brands, Angus Lilley, stated that higher costs mean tougher choices for local pubs, higher prices for consumers and less money circulating through the hospitality sector, which keeps our towns and cities vibrant.A recent YouGov poll commissioned by the Wine and Spirit Trade Association found that one in four regular drinkers will buy less alcohol from shops if prices continue to rise, and two in five will reduce their consumption in pubs and restaurants. In my constituency, we have excellent local brewers such as Tilford and Kilnside, and craft distillers such as Hogmoor distillery; I had the pleasure of visiting the team recently and sampling their locally made spirits. Those are small creative producers that bring jobs, pride and flavour to their communities, but they will not survive if the alcohol industry continues to face relentless pressure from Government policy that fails to support its long-term sustainability. If we price people out of the pub, we do not just lose the sale; we lose the cornerstone of British community life.Turning to the current picture, sales data illustrates the scale of the problem. In the 12 weeks to mid-June this year, volume sales for wine were down by 3% in the off-trade, rising to 5% for spirits. The picture in the on-trade is even more severe, with wine volumes down by 7% and spirits by 8%. Hospitality has been one of the hardest hit sectors of the economy since the Budget, accounting for nearly half of all job losses. We are now taxing our way to lower revenues. That is not sound economics; in fact, it is counterproductive. As one industry voice put it:“Britain is becoming the most taxed place to raise a glass and the hardest place to sell one”.Colleagues will recall that in 2023, the UK moved from the inherited EU duty framework to a strength-based system taxing wine by labelled alcohol by volume in 0.1% increments. Alongside that reform, the headline rate increased in August 2023, and it increased by a further 3.65% in February of this year. For a 14.5% ABV wine, that represents a cumulative increase of around 44% in just 18 months.
- I am grateful to my hon. Friend for securing this debate. On the point about excessive tax inhibiting entrepreneurship, I visited Ned Awty and his family, who run the Oatley vineyard in Cannington in my constituency, and they pointed out that it is perverse that the United Kingdom has a duty relief scheme for small brewers and distillers but no similar scheme for small vineyards. Does my hon. Friend agree that a small duty relief scheme for small producers would help English wine producers—and that we could all raise a glass to that?
- My hon. Friend is absolutely correct, and he pre-empts something I was going to say later about the inconsistencies and unfairness in the current system. Small producer relief is capped at 8.5% ABV, and the Government should look at what they can do for the smaller producers that he mentions.The TaxPayers’ Alliance has highlighted that the UK has the third highest wine duty in the world, now at £2.44 per bottle—an increase of 9p since 2023. By comparison, France charges the equivalent of just 2p per bottle and Romania 1p, and Spain applies no excise duty at all. In fact, half of the EU’s 27 member states do not charge duty on wine whatsoever. When neighbouring countries impose far lower rates, our competitiveness suffers. We pride ourselves on being a global trading nation, but we have priced ourselves out of the very markets we helped to create. Labour’s current approach is short-sighted and self-defeating: taxing ambition, throttling innovation and penalising productivity. The Treasury cannot build growth by breaking the back of the very industries that deliver it. As Winston Churchill put it in 1904, we cannot tax our way to prosperity any more than we can drink our way to sobriety.I turn to the inconsistencies and unfairness in the system, which my hon. Friend just mentioned. Products with an ABV of between 8.5% and 22% are taxed at the same rate per litre of pure alcohol, and yet producers of beer with an ABV of between 3.5% and 8.4% pay more than twice as much duty as producers of cider of the same strength. Small producer relief, although it is welcome in principle, is capped at 8.5% ABV and therefore excludes virtually all winemakers and distillers. This policy fails to support small English wineries such as Chapel Down—in the constituency of my hon. Friend the Member for Weald of Kent (Katie Lam)—Nyetimber or Camel Valley, which I am sure Members are all familiar with, and which contribute to rural employment and agricultural production.
- The hon. Member is making a fantastic speech, and I agree with everything that he is saying. West Dorset is blessed with 11 fantastic small vineyards. For most of them, the primary route to market is through local shops and rural pubs. Does he agree that unless we raise the threshold to create equality in the marketplace and a fairer system alongside small producers of beer, those vineyards will never have a chance to grow beyond their local area?
- I agree with the hon. Gentleman entirely. It makes very little sense to design a system that punishes small wineries for doing precisely what we want, namely innovating, employing and exporting. We need a tax framework that supports the makers, not merely those who take.There is a revenue reality to this as well. Between April and September this year, receipts from alcohol duty were £300 million lower than during the same period in 2024. If that trend continues, the Treasury will collect around £1 billion less than was forecast by the Office for Budget Responsibility. We have reached the wrong side of the Laffer curve, where higher duties result in lower total receipts. The Treasury cannot continue to draw from the same barrel and expect it to refill itself. That should give the Chancellor, the Minister and Treasury officials pause for serious reflection.With the autumn Budget approaching, I would be grateful if the Minister could address three areas of concern. First, have the Government undertaken, or will they undertake, a full assessment of the impact of successive duty increases on consumer prices, business sustainability and overall tax receipts? Secondly, will the forthcoming three-year review of the duty system consider whether the current tax by ABV model is appropriate for wine, a product whose alcohol content varies naturally with climatic conditions? Thirdly, will the Government revisit the structure of small producer relief so that it more fairly supports genuinely small-scale producers, including English winemakers and craft distillers, in line with the original policy intent?Finally, will the Treasury review the cumulative impact of wider regulatory costs, such as the extended producer responsibility packaging levy, business rate changes and other compliance burdens, to ensure that they do not disproportionately harm low-margin businesses within the sector? I thank the Wine and Spirit Trade Association and Treasury Wine Estates, whose compelling evidence shows a sector under extreme pressure, a tax system that is internationally uncompetitive and an approach that risks delivering diminished returns to the Exchequer. When consumers are price sensitive, hospitality is struggling, and revenues are falling despite higher rates, it is right to ask whether the system remains fit for purpose. The objective must be a framework that is fair between product categories, proportionate in its impact, and effective in raising the revenue on which our public services depend.
- 6:42 pm
- What a pleasure it is to serve under you this evening, Mr Turner. I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for introducing the debate so ably, and I agree with much of what he said. He presented a number of questions to the Minister on the operation of alcohol duty, but one question that was perhaps missing was around the health impacts of having the wrong level of alcohol duty in the UK. I will touch on that in my speech.In my life, English wine has moved from being a feature of jokes on sitcoms to a premium product—sometimes in terms of price, but more importantly in terms of its quality. I am pleased to see that Scotland’s wine industry is also growing. In 2025, so far five new vineyards have registered with Food Standards Scotland. I hope that this industry will continue to flourish and grow. I am proud to have the North British Distillery, one of Scotland’s oldest and largest Scotch grain whisky producers, in my constituency; I would be in trouble if I did not mention it. I hope that any consideration to changes on alcohol duty covers the whole of the industry in the UK, rather than just one part of it.As much as I want these industries to thrive, and I absolutely do, we must be conscious of alcohol’s public health implications. It is our responsibility to find the right balance, with an alcohol duty that works for businesses, as we have heard, but that also supports public health. We need an alcohol duty system that works for our wine industry, supports the hospitality sector and improves public health. I shall talk about informed moderation when it comes to drinking. I am not here to lecture anyone—I enjoy a drink, like everybody else—but I am a real advocate of awareness of the implications of consuming alcohol.I am concerned about four things, really. I think that drinks are getting stronger; that has certainly been the case in my lifetime, and it is to the detriment of the taste of some wines. We are drinking more at home post covid, and that has real health implications. I also have to say that I am eating more crisps at home as well post covid. [Laughter.] It is a serious point, actually. Our hospitality industry is under huge pressure, and this impacts on the vibrancy of our high streets.
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- I congratulate my hon. Friend the Member for Farnham and Bordon (Gregory Stafford) on giving us an opportunity to discuss this very important topic that affects so many people and businesses in the Weald of Kent, which proudly produces some of the finest wines in the country.The principle of taxing alcohol by strength may make sense in theory, but wine is an agricultural product. Its strength cannot be engineered to order; instead, it varies naturally with climate and vintage. A system designed for factory production simply does not work for vineyards rooted in the soil. Sadly, our wine businesses have faced steep duty increases, ever more paperwork and, as a result, mounting costs across the board. In the Weald of Kent, small vineyards—often family-run and started from scratch—are grappling not just with higher duties but with higher label costs, greater packaging charges and yet more red tape.In May, I wrote to the Minister’s predecessor to raise my concerns about the impact of alcohol duty on the wine industry. In his reply, he said that producers below 8.5% ABV could claim draught relief and small producer relief. That is true, but almost no wine sits below 8.5% strength. Might the Minister be able to tell us how many UK wineries actually claimed either relief last year?
- Like the hon. Lady, as a south-east MP, I have some amazing vineyards in my constituency, such as Bolney Wine Estate and Albourne Estate. They have told me about the challenges of the 8.5% cap that the hon. Lady has so articulately set out. It strikes me, however, that the previous Conservative Government brought in that cap. Does the hon. Lady think that current members of the Conservative party regret that decision from 2022?
- It is not for me to speak for them, but it is reasonable to say that the system we have does not work very well. It would not be right to pretend otherwise on behalf of my constituents who have to deal with it every day.The Minister’s predecessor also said that the new system benefits lower strength wines, including many British wines. Since February, overall rates have risen. Might the Minister be able to tell us what share of English wines are paying less or more duty now than under the previous system? Finally, the previous Minister said that reforms would strengthen the tax base, yet as far as I can see, between April and September, alcohol duty receipts were almost £300 million lower than in the same period last year, despite the rates rise. It would be useful if the Minister could explain that.Duty on 14.5% ABV wine is now almost half as much more again as it was in August 2023. As my hon. Friend the Member for Farnham and Bordon rightly pointed out, well more than half the shelf price of a bottle of wine is now tax. In France, the equivalent duty is a few euro cents, and in Spain, it is nothing at all. This duty system, combined with the general tax rises in the last Budget, is putting businesses at risk. Could the Minister please rule out any further duty increases in the upcoming Budget? Countless small producers in the Weald of Kent, and about 1,000 independent merchants across England, are already struggling under the weight of new bureaucracy and tax pressures.Winemaking is not an exact science. As I mentioned, alcohol strength fluctuates from year to year, and small differences can double a producer’s duty bill. Large multi-national producers may be able to absorb that; small family wineries cannot. They cannot dial down their ABV without changing the taste or quality of the product. They cannot dilute wine without destroying it. These are new entrepreneurial businesses built on enormous risk and long-term investment. Many vineyards in the Weald have put everything they have into buying land, planting vines and waiting years before their first sale.
- 6:54 pm
- It is a pleasure to serve under you, Mr Turner. I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for securing this important debate. I was delighted that he broadened his comments beyond the wine industry because, of course, the lessons we can learn from the whisky industry will apply to the burgeoning wine industry. I also acknowledge the contribution from the hon. Member for Edinburgh South West (Dr Arthur). I agree with many of his comments about the health implications, but I also acknowledge, for once, a Scottish Labour MP praising the Scottish Government rather than criticising them.The impact of alcohol duty is being felt far beyond the UK wine sector. It is critically affecting the nation’s biggest food and drink export: Scotch whisky. Despite its proven value to the economy—it supports more than 66,000 jobs across the country and had an export value of £5.4 billion last year—the industry now stands under a mounting threat that has been created by current Government policy.In just two years, Scotch whisky has faced a 14% increase in duty, meaning that 70% of the average cost of a bottle of whisky represents tax. On top of that, producers are under immense pressure from other rising input costs, higher employment expenses and global market pressures, including damaging US tariffs that threaten stability and market share. Despite that, the expected revenues from duty increases have perversely failed to materialise. We know that the Government want to put growth at the heart of their strategy, but last year’s falling revenues show that excessive taxation is hurting both the industry and the Treasury. That also applies to the growing wine sector in this country. I expect that is partly to do with climate change, although I do not expect that my constituency in the north of Aberdeenshire will see any vineyards in the near future.
- 6:57 pm
- It is a pleasure to serve under your chairmanship, Mr Turner. I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for bringing us this very important debate; it is much appreciated.The overall logic of more alcohol resulting in more tax makes sense, and the taxation of wine needs to be stable, fair and workable. That principle has to work in practice, and we are completely failing on that in the current system. We really need to fix that as soon as possible.To recap, before August 2023, in line with EU regulations, wine duty was predominantly charged according to volume, rather than how much alcohol the product contained. In August 2023, through the Finance (No. 2) Act 2023, a new duty system was introduced that required duty to be paid on all products according to strength. On 31 January 2025, wines between 11.5% ABV and 14.5% ABV were taxed as if their strength were 12.5%, but that measure was withdrawn on 1 February 2025. Therefore, 85% of all wine sold in the UK is subject to the same rate of duty.Under the new system, that has been replaced by 30 different rates based on ABV at 0.1% increments. That is extraordinary. It would make sense if we were talking about vodka, which is distilled, or beer, which is brewed, as the producer is able to perfectly and precisely determine how much alcohol is in those products. It makes absolutely no sense for an agricultural product like wine; a bottle of wine may have more or less alcohol in it from one season to the next. Dealing with the microscopic increments puts domestic and foreign producers and retailers in this country in real trouble, because every single one of those bottles needs to be measured and calibrated, and priced and taxed accordingly. The administrative burden of that is absolutely horrendous.I hear that from Oli Gauntlett, the head of Eynsham Cellars and a loyal constituent, and from the Oxford Wine Company, which is a wonderful wine company that serves Oxfordshire. It has had enormous admin trouble dealing with this issue. I also hear it from Majestic Wine, which has a shop in Witney. The single best reason to change this is, as so many people have said already, that it is not working: we have £300 million less excise duty as a result. I cannot think of a better argument to tickle the Treasury into a sensible decision.
- Does my hon. Friend agree that this policy directly hits the small independent wine importers, such as The Wine Loft in Brixham? It sells many different kinds of wine, but it does not have the power of Sainsbury’s or Majestic. It does not have a whole department to manage it and bring in large quantities of the same wine.
- I agree 100%. That is a great illustration of just how painful and unnecessary it is. This is not benefiting anyone, not even His Majesty’s Revenue and Customs. The Budget is very soon and, bluntly—I do not want to stick the knife too much into my Conservative colleagues—I think the previous Government’s tax reforms were, overall, quite sensible in levying more tax on higher amounts of alcohol, but that is obviously mad when it comes to wine. I am an equal-opportunities knife sticker, so why did Labour follow a mad Tory policy? It is a bit like, why are they following a mad hard Brexit? Pull out, blame the Tories and then change the policy back to something sensible. They could raise more tax and put UK growers and UK retailers back on their feet.
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