Alcohol Duty: UK Wine Sector

Edward Morello Excerpts

Tuesday 11th November 2025 Westminster Hall

[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.