At the time of writing, the result of the latter is still unknown, but it’s a huge relief to know the outcome of the new coalition’s deliberations on duty.
Tory plans to increase VAT have been well documented since before the party’s push for power even really began, so it hardly surprised anyone. But it’s fair to say that most of the trade was braced for another round of duty hikes. That our worst fears failed to materialise provides some long overdue respite and is the result of intense lobbying by trade associations battling to ensure the industry’s needs got a fair hearing. Of course, that work began long before David Cameron took power on May 12. Groups like the Wine & Spirit Trade Association have been actively engaged with the Tories and Lib Dems for some time.
The hiatus created by the election result provided yet more crucial opportunities to hammer home the trade’s views as the coalition got to grips with the task in hand. It’s been many years since we were in a position where associations representing our disparate factions from brewers, distillers, wine suppliers and cidermakers unanimously agreed with government policy.
The stark fact that Labour’s taxation policy, which saw hikes of 24% over as many months, has caused the Treasury’s take from alcohol to drop so significantly has finally been acknowledged. Yet the coalition could still have clobbered the trade, if only to appease medics and middle England that it was using tax to tackle binge-drinking. Instead, for now at least, it appears our leaders are listening, which means jobs that might have been lost are safe and suppliers can focus on bringing innovation to market, which should stimulate the economy and generate revenue for the Chancellor.
Trade associations have run a strong and sustained campaign but we’re clearly far from being out of the woods yet.
The government has left the door wide open for more increases in the autumn as it reviews duty again, along with commercial pricing strategies. Further negotiations to highlight the positive work being undertaken in the trade, such as anti-binge-drinking campaigns and responsible retailing are the next frontier as the industry’s lobbying shifts up a gear.
Whatever your politics, we could learn a lot from the coalition’s stance. Not taxing alcohol again because it risks killing one of the cash cows that might provide vital stimulus is the kind of simple logic we need to harness. The government is saying it wants to work with us. As an industry, we need to build on the momentum we’ve banked by showing we can work together through clear, focused messaging delivered with a united voice.