Alcohol Duty: UK Wine Sector

Tuesday 11th November 2025 Westminster Hall

18:31

[Gregory Stafford (Farnham and Bordon) (Con)]

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.

[Sir Ashley Fox (Bridgwater) (Con)]

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?

[Gregory Stafford]

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.

[Edward Morello (West Dorset) (LD)]

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?

[Gregory Stafford]

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.

The UK’s wine and spirits sector is one of our quiet economic strengths. It deserves a regulatory environment that allows it to thrive, invest and continue contributing to communities and the Treasury alike. The Government should remember that a thriving economy fills the Exchequer, and a suffocated one drains it. I look forward to hearing the Minister’s response, and in particular how the Government intend to support the stability, competitiveness and long-term sustainability of this vital industry.

18:42

[Dr Scott Arthur (Edinburgh South West) (Lab)]

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.

We have a duty to ensure that the public are aware of the risks of drinking. Recently, I met representatives from Scottish Health Action on Alcohol Problems. They told me that in Scotland in 2024, a total of 1,185 alcohol-specific deaths were registered. That was the lowest number registered since 2019—something that we should celebrate. It is perhaps, in least in part, due to minimum unit pricing of alcohol in Scotland, but it still shows the damage that excessive alcohol consumption can do, and it remains too high in Scotland and elsewhere.

By choosing to consume lower strength alcohol, we can continue to enjoy drinking and the benefits that it brings us on social occasions, while also addressing the harms caused by alcohol. I welcome the fact that the Government are looking quite seriously to meet their commitment to label alcohol, just as we did as a country with cigarettes, to make people more aware of some of the risks that come with drinking. For example, the World Cancer Research Fund told me that alcohol-related breast cancer can be caused even by low levels of consumption of high-strength alcoholic drinks. Reducing the strength of alcoholic drinks can reduce the likelihood of this type of cancer. I have to say, they told me about this at the Labour party conference in Liverpool—not the best place to give people advice on drinking a little bit less. That is why I feel that a well-designed minimum unit pricing system across the UK is worth considering, alongside a meaningful and well-structured alcohol duty regime, but I understand some of the concerns around minimum unit pricing of alcohol.

Many people active in this sector look back to when Alistair Darling was Chancellor in the UK, and the changes that he made to the alcohol duty regime and how that directly related to improved health outcomes for people. That is something that we can learn from. I am always proud to say that I followed him, although there was someone between us, as MP for Edinburgh South West.

Alongside an effective duty system, it is also right that we encourage drinking in as safe an environment as possible, while supporting our hospitality industry. During a meeting with the Institute of Alcohol Studies last month, I was told that freezes in alcohol duty disproportionately benefit the sale of alcohol in shops, allowing supermarkets to maintain lower prices in comparison with hospitality venues. This is at the heart of so many pubs feeling the strain, because it is so much cheaper for people to drink at home than in pubs and other venues. Hospitality is a massive employer in the UK, and it is under huge stress. We need to look at taxation of alcohol right across the board to make sure that we are benefiting that sector while also reducing harmful drinking at home. An effective alcohol duty can support many of these jobs by closing the gap between the prices in pubs and supermarkets. That, in turn, encourages people to drink—hopefully, British-produced alcohol—publicly, which is far safer than consumption in private.

It is right that we take time to thoroughly consider alcohol duty, and make sure that it works for our wine industry and for businesses like the North British Distillery in my constituency. But we also have to see this debate as an opportunity to support the hospitality sector and improve public health. These are three really important things, and I do not envy the Minister in trying to reach a balance between them.

18:48

[Katie Lam (Weald of Kent) (Con)]

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?

[Alison Bennett (Mid Sussex) (LD)]

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?

[Katie Lam]

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.

In my constituency, we are proud to host many of Britain’s leading wineries, including Chapel Down, Gusbourne, Balfour, Biddenden, Westwell, Woodchurch and Domaine Evremond—the list goes on. They bring visitors, jobs and pride to the Weald, and it is an utter pleasure to visit them all. We are also home to small start-ups, such as the husband and wife team I met last month in Hamstreet taking a leap of faith into the sector. It if is tough for the big names, it is tougher still for the small ones. Now, they face not just duty increases but rising national insurance costs, higher minimum wages, an end to flexible employment contracts, changes to inheritance tax relief, and packaging fees that penalise glass, which is the only viable material for quality sparkling wine.

When I last raised the broader issue of wine in England, I asked the Minister’s colleague in the Department for Environment, Food and Rural Affairs whether he would support the sector’s call for targeted help, and he said it was a matter for the Treasury. I say to the Minister today, “Please look again.” I know that he did not create the duty framework, but my hon. Friend the Member for Farnham and Bordon is right that we seem to have reached the tipping point at which our taxation system is so complex and onerous that it is collecting less money than a simpler lower-rate system would. It would be great to hear what plans the Minister has to support such an exciting and dynamic industry creating jobs and amazing export opportunities in rural parts of the country such as my home, the Weald of Kent.

18:54

[Seamus Logan (Aberdeenshire North and Moray East) (SNP)]

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.

The Scotch Whisky Association has rightly described the current excise duty system as broken. It is now up to the Chancellor to create a stable and supportive environment for the industry by freezing excise duty. With more than 1,000 jobs lost since the last Budget, it is time for the Government to recognise the counterproductive nature of this policy and set it right in the upcoming autumn Budget.

Significant progress is being made in Scotland, as discussions between the First Minister and President Trump during his state visit highlighted the potential for a trade deal that would strengthen ties between the US whiskey and Scotch whisky industries. The Chancellor must now show the same commitment by prioritising the Scotch whisky sector and recognising that supporting its growth means maintaining the duty freeze to allow for this world-renowned industry, and hopefully the wine sector, to thrive.

18:57

[Charlie Maynard (Witney) (LD)]

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.

[Caroline Voaden (South Devon) (LD)]

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.

[Charlie Maynard]

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.

19:01

[James Wild (North West Norfolk) (Con)]

It is a pleasure to serve with you in the Chair once again, Mr Turner. I congratulate my hon. Friend the Member for Farnham and Bordon (Gregory Stafford) on securing this important debate. In Blur’s immortal words, he knows his claret from his Beaujolais, but I will not have anyone say he is a charmless man.

It is a pleasure to speak in support of an industry that is doing well in this country, although it is facing some challenges. Wine is a home-grown success story, with more than 1,000 vineyards and nearly 5,000 hectares under vines across the country. In my North West Norfolk constituency, I am fortunate to have wineries including the award-winning Burn Valley and Cobble Hill, which are contributing to the local economy, supporting tourism and creating jobs. Overall, the wine and spirits industry contributed £76 billion in economic activity last year, with nearly half of that coming from the wine sector. Despite this success, the Government are putting more burdens on the sector.

This has been a good debate, and I think my hon. Friend the Member for Weald of Kent (Katie Lam) wins the prize for the number of wineries in her constituency. The hon. Member for Edinburgh South West (Dr Arthur) made some important points about public health. Unfortunately, the hon. Member for Witney (Charlie Maynard) could not resist mentioning Brexit—he seems slightly obsessed.

The domestic sector is largely made up of small producers, with two thirds producing fewer than 10,000 bottles a year. Generally, these are family businesses, local employers and passionate entrepreneurs. Employment in the sector has grown significantly over the past few years, and since 2010 bottle sales have increased to over 9 million.

The UK is a global hub for the trade, being the second largest importer of wine by volume and value. This is a sector that we should be nurturing, not penalising. When we were in government, that is what we did. We introduced the simplified duty system, based on taxing alcohol by strength, with an 18-month easement to help the sector. We encouraged businesses to diversify and move into wine production.

Importantly in the context of this debate, we froze alcohol duty rates in the 2023 autumn statement, and we continued that in the spring Budget of 2024. That is a record of support, but sadly this Government have taken a different path. At last year’s Budget, they raised the headline rate of alcohol duty by inflation. As we have heard, around 60% of the cost of a bottle of wine is now tax, and Wine GB warns that the increases are driving down demand and, in turn, cutting revenue to the Treasury. One in four drinkers say they will buy less alcohol as a result of the price increases.

Let us be clear that producing wine in Britain is not easy. Yields are 30% to 50% lower than in France or Spain, labour costs are higher, the weather is obviously unpredictable, and input prices keep rising. But instead of backing the sector, the Government keep piling on costs. Alcohol duty—up. Business rates—up. National insurance—up. As we have heard, the Wine and Spirit Trade Association has said that revenues from alcohol duty are down £300 million in the first six months of this financial year. If that continues, the Treasury will be bringing in £1 billion less than was forecast by the Office for Budget Responsibility at the spring statement.

The Government are putting the country on the wrong side of the Laffer curve, not just on alcohol taxes but across the board. The Minister is relatively new in post, but has he commissioned advice on the duty’s impact on the sector? Has he taken a fresh look at the data or at the assumptions used by the OBR? If not, will he do so, and do so rapidly? The Opposition are firmly on the side of Britain’s wine producers. It is a vibrant, innovative and home-grown sector that deserves support, not more taxation.

Of course, it is not possible to have this debate without talking about the hospitality sector, as a number of colleagues have. Wine is more than a drink; it is about socialising and shared experiences. The sector clearly depends heavily on pubs, restaurants and hotels to introduce consumers to this great British product.

However, under this Government, hospitality, like so many sectors, is struggling. Nearly 90,000 jobs have been lost since the disastrous Budget a year ago, and today we have seen the unemployment rate hit 5%—it has gone up every month under this Government. That is the result of the Chancellor’s terrible judgment in making it more expensive to employ people. With rising employment costs, the jobs tax, the extended producer responsibility and higher business rates, we see layer upon layer of additional cost, so it is no wonder that UKHospitality has described the Government’s approach as a “hammer blow”.

The wine sector has put forward some suggestions for the Chancellor and Ministers ahead of the Budget. First and foremost, it asks that they reconsider some of the decisions to increase business taxes, and it asks them to consider a freeze on excise duty or a wine tourism relief. As was highlighted by my hon. Friend the Member for Bridgwater (Sir Ashley Fox), and echoed by others, it also asks for the alignment of small producer relief with the realities of the wine industry. Those are all practical ideas that are worthy of consideration, so will the Minister commit to looking seriously and carefully at all of them?

Rather than taxing success, we should be nurturing it. The wine sector is a model of sustainable, rural growth, and it deserves our support. Its ask of the Minister is simple: will the Government work with the sector and listen to it, and will they look at the evidence and commit to easing the burden on our wine producers?

19:07

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I am glad to be serving under your chairmanship, Mr Turner. I am grateful to the hon. Member for Farnham and Bordon (Gregory Stafford) for securing this important debate, and for speaking so eloquently in support of the UK wine sector. It is fantastic to hear him speak about the sector’s growth, as well as its continuing progress on exports, which is a really good thing. The irony is not lost on me, though, that he said that Treasury Wine Estates has some reservations about the Treasury’s tax policy—I will look into that.

I heartily echo the hon. Gentleman’s praise for the UK wine industry’s significant contribution to our economy, culture and tourism. As he mentioned, the statistics speak for themselves: we are the world’s second largest wine importer, bringing in 1.7 billion bottles in 2024. Sales of both imported and home-grown wine support hundreds of thousands of jobs, particularly in hospitality and retail. In recent years, as many Members have mentioned, more and more people have taken up work in the UK’s domestic wine sector, which is much like a dessert wine—small, but strong.

Industry figures suggest that more than 1,000 vineyards and 200 wineries contribute to our rural economy, with land under vine growing fivefold since 2005. The hon. Member for Weald of Kent (Katie Lam) listed many of the wineries in her patch; one of the challenges of being a Parliamentary Private Secretary, like my hon. Friend the Member for Hastings and Rye (Helena Dollimore), is that they do not always get to speak in these debates. However, I have been reliably informed by note that the two Members have the same number of vineyards in their constituencies—there may have to be a little Kent-based competition.

It is great to see that the number of home-grown products is increasing, with production exceeding 10 million bottles last year, and with sales rising too. This Government are committed to fostering an environment in which the wine industry, like its vines, can thrive and grow.

The hon. Member for Farnham and Bordon, as well as other Opposition Members, made important points about the UK’s alcohol duty system. Before I turn to those points, I will first acknowledge the Government’s wider work to support the wine industry through agricultural grants and export promotion. The Government have committed at least £200 million to the farming innovation programme through to 2030, and we champion domestically produced wines on the international stage. For example, we showcased English sparkling wine at the Osaka expo earlier this year.

As I have mentioned English sparkling wine, it is important that I also mention the contribution of my hon. Friend the Member for Edinburgh South West (Dr Arthur), who talked about Scotland’s growing wine industry and the impact it is having on high streets. He also said that, in designing a sensible tax system, it is important that it takes account of the impact on the health of the population, which I think is reflected in the current system.

Members have spoken about the previous Government’s reform of the alcohol duty system. I am a Labour MP, so it is not lost on me that I am defending an alcohol duty system implemented by Conservative MPs, and that Conservative MPs are opposed to a system implemented by their own Government. We learned in opposition that it is not always wise to oppose the decisions made by our party when it was previously in government. Indeed, I think that one of the reasons we won the last election is because we were able to talk proudly and confidently of the achievements of previous Labour Governments. Anyway, it is up to Opposition Members to choose which aspects of previous Government policy they wish to support, or not.

As others have mentioned, the alcohol duty system is now based on the principle of taxing alcohol by strength, which means that alcohol duty increases with a product’s ABV. Although it is true that some higher-strength wines have faced increases in duty, that has been balanced by reductions in duty for lower-ABV wines, including some British wines. Prior to the reforms, wines with 11% ABV and wines with 14% ABV both paid the same duty per bottle. Now, there is a difference: wines with 11% ABV pay £2.43 in duty and wines with 14% ABV pay £3.10.

I am interested in the point made by the hon. Member for Weald of Kent about the extent to which British wine companies are producing wine with an ABV below 8.5%. I will consider that point. Indeed, I was thinking the same thing when I was reading up on this topic earlier today. However, I know the changes were introduced alongside conversations with industry representatives, and those conversations will continue as the changes bed in.

In recognition of the big changes that were implemented, it is right to assess their impacts after they have had time to take effect. We have said that will take place at least three years after their introduction in 2023. I will take that work forward next year with officials from HMRC, and I would welcome evidence from Members in this Chamber, including representations from the businesses and communities they represent, and of course I will engage with the wine industry.

The hon. Member for Farnham and Bordon said he had three points, but I think he had four in the end, including on the cumulative impact—I will try to address all four. On his third point, yes, we will consider in the round all aspects of the system’s current design. I do not want this review to be one that does not properly interrogate the design of the system, and I also do not want to pre-empt where it will get to, but in my role overseeing that review, I want us to look carefully at the design of the system as a whole. I think the system is sensible and fair, but I also know there are challenges that have been raised by Members today.

On the hon. Member’s big point about cuts or freezes to alcohol duty, it is worth realising that any such cuts or freezes would come at a cost to the Exchequer. The Office for Budget Responsibility produces the costings for any changes to taxation policy.

[James Wild]

They are always wrong.

[Dan Tomlinson]

The hon. Gentleman might think that some of the OBR’s assumptions are wrong. I encourage Members, if they have evidence, facts or figures that they want to put to the OBR on the elasticities—as I believe it is called when a tax rate is changed and has an impact on consumption—to send them in. The Government are confident in the OBR’s independence, but I will always want to ensure that we are putting forward accurate costings. In this instance, I believe that the OBR is in the right place when it comes to the elasticities, but Members should feel free to send in their own representations.

It is worth noting that freezing alcohol duty this year, if inflation was around 4%, would be equivalent to a 3.85% duty cut. Using HMRC’s published ready reckoner, this would cost the Exchequer roughly £440 million a year. It is right, therefore, that any decision on alcohol duty weighs the impact on overall revenues carefully. That is what I am confident that the Chancellor will do when she makes a decision in the Budget in just a few weeks.

I will try to run through some of the points made by Members in this debate. The hon. Members for Bridgwater, for Weald of Kent and for Farnham and Bordon, and the Opposition spokesperson, the hon. Member for North West Norfolk (James Wild), raised the issue of small producer relief for wine. That question was considered in detail as part of the previous Government’s review into alcohol duty, and as I have said, we will look to review it three years after the implementation that took place on 1 August 2023. We want to gather data and really look at the impact of the reforms. If Members want to come forward with proposals for change, then they should do so.

[Charlie Maynard]

Will the Minister give way?

[Dan Tomlinson]

Of course. I was looking forward to my first intervention, and will happily give way.

[Charlie Maynard]

I am just going to make a plea. HMRC is losing nearly £1 billion a year, which is incredibly bad news, and there are massive frictions and admin costs on business. Why would we not just go back to the easement? We can stand looking at this massive problem, or we can face facts and deal with it—and actually get money for the Exchequer.

[Dan Tomlinson]

We will look in the round at the changes that were implemented in 2023. I do not want to rush to implement something that does not work for the alcohol industry as a whole and is not fair or proportionate. But I understand the points that have been raised—they are well made and I have been listening.

The hon. Member for Farnham and Bordon also raised the cumulative impact on the wine industry of various changes that have been made by previous Governments, and the current Government, including around packaging. That does go to a big-picture point that is contested in this place about the tax rises implemented in the Budget last year. It is my view, and the view of the Chancellor and the Government, that in the round we had to make those decisions to raise revenue. I understand that it led to additional taxation on businesses, but that was on the largest businesses—around half of businesses, those with the fewest employees, are not paying any additional national insurance as a result of the changes last year. But I understand that there was an impact on those firms that had to absorb those additional taxation levels.

The Government think that it was the right decision in order to raise revenue to fund our public services and ensure that borrowing was not increased more than is sustainable. It is right that the Government ensure that we borrow to invest in the future of this country, something I wish the previous Government had done when interest rates were down at 0.5%. On a serious point, as the Minister with responsibility for taxation policy and the Treasury, I am looking closely at the impact of all the changes that have been introduced in previous years that require compliance and burden for business. We have to look carefully at them, because we want to see businesses growing, thriving and being able to hire more people and expand.

On business rates specifically, the Chancellor will come forward at the Budget with the permanently lower multipliers for retail, hospitality and leisure. That policy was set out in our manifesto and we will announce the detail at the Budget.

Let me turn to the Liberal Democrat spokesperson, the hon. Member for Witney (Charlie Maynard). I was glad to hear a shout-out for my hometown of Witney—I went to Wood Green school in his constituency; it is a wonderful part of the world. He, too, raised the point that one of the challenges with the move to the new system is the additional bands. If we look at it on a chart, the line is flat because the rate is the same, but of course I am aware that, depending on the ABV, producers are at different points on that line. That is something they have to deal with, and he is right that it is maybe more of a challenge for those who are producing wine and growing products. I do understand that; the point was well made, and there will be a review of the tax three years after implementation.

The hon. Member for Aberdeenshire North and Moray East (Seamus Logan) mentioned Scotch whisky and was interested to hear from me about the support that the Government are providing to the industry. I would say that the industry is set to be one of the biggest beneficiaries from the trade deal with India, which is set to reduce tariffs from 150% to 75% initially and then to 40% over time.

I do not think I have reached every single question that Members raised, but I hope they feel that I have covered the points that were made. To conclude, our Government are dedicated to supporting the UK wine industry through a range of measures, including ensuring an alcohol duty system that is fair and proportionate. I thank the hon. Member for Farnham and Bordon for securing the debate. I share his pride in this growing British success story and look forward to further discussions, including with WineGB and the Wine and Spirit Trade Association—tomorrow, in fact—about how we can build a prosperous and sustainable future for UK wine.

17:33

[Gregory Stafford]

Having eight minutes to wind up, when usually one gets about eight seconds in this place, is a luxury that I will indulge, at least to a limited extent—I do not want to keep hon. Members from their wine.

This has been a fascinating debate and a wide range of issues have been raised. It was wonderful to hear about the wine producers and hospitality industries in people’s constituencies, as exemplified by my hon. Friend the Member for Weald of Kent (Katie Lam), who is a doughty advocate not just for her constituency as a whole but, from what I can see from social media, for her vineyards and the producers in her constituency.

Every day is a school day: I did not realise that Scotland produced wine, so I am grateful to the hon. Member for Edinburgh South West (Dr Arthur) for raising that—and for talking about his crisp-eating habits. He rightly mentioned the health implications, and I hope that nothing I said in my speech detracted from that. I would like to see more education, and more targeted services and treatment services. I think that would achieve more than taxing the Shiraz that we have with our Sunday lunch, although he may beg to differ with me on that.

We have not just talked about wine; the hon. Member for Aberdeenshire North and Moray East (Seamus Logan) rightly mentioned the Scotch whisky industry, which is vital.

The Lib Dem spokesman, the hon. Member for Witney (Charlie Maynard), outlined comprehensively how complicated the system is. I was grateful to my hon. Friend the Member for North West Norfolk (James Wild) for mentioning Blur. I think that dates him and me, but he was right to outline that the last Conservative Government froze duties. That is something that the Government should consider at the Budget.

I feel sorry for the Minister, because—behind the Chancellor, perhaps—he probably has the worst job in Government, but it does not have to be that way. He could make everyone very happy at the Budget by being one of the first Ministers responsible for taxation in a Labour Government to reduce tax. We shall wait and see. I was pleased to hear that, in the three-year review, the Government will look at the wider implications and the design of the system—and, I think he said, at small producer relief.

However, I was slightly disappointed by the way the Minister dismissed the impact of tax rises on the hospitality industry. That 90,000 jobs have disappeared since the last Budget is a scandal. If the same number of jobs had been lost from a car plant or an oil refinery, we would be debating that in the House and the Government would be stepping in to bail the industry out. Although the impact is dispersed across the country, those 90,000 jobs are equally important, and I hope the Government reconsider in particular their national insurance increase, which has hit the industry so hard.

I urge the Minister again to review the cumulative burdens that have been placed on the industry through both tax and regulation, and I hope that when he has his conversations with representatives of the industry tomorrow—I am glad that my debate has spurred him to have that meeting—he listens seriously to their concerns and gives them the relief and response that they seek.

Question put and agreed to.

Resolved,

That this House has considered the impact of alcohol duty on the UK wine sector.

19:25

Sitting adjourned.