Question to the HM Treasury:

To ask His Majesty's Government whether His Majesty’s Treasury has done any economic modelling on the impact of the new alcohol duty bands on the consumption of alcohol; and if so, whether this modelling predicts that they would (1) incentivise alcohol drinkers to drink lower-alcohol drinks, and (2) reduce their overall consumption of alcohol.

The UK’s complex and archaic alcohol duty system has been widely criticised by independent commentators including the Institute of Fiscal Studies (IFS), the Institute of Alcohol Studies, and the World Health Organization, with many of them advocating for a strength-based system.

We are undertaking the biggest reform of alcohol duties for over 140 years and moving to a system where all alcohol will be taxed by strength. We are also introducing a new lower duty band for products between 1.3% and 3.4% ABV. As under the current duty system, products below 1.2% ABV will not incur alcohol duty. Higher ABV bands will have higher rates of duty, to reflect their greater potential for harm.

In October 2020, the Government launched a call for evidence which sought the views of stakeholders on how the system could be reformed. This closed in November 2020 with 106 responses. In parallel to the call for evidence, the Government also undertook a series of roundtables with groups of stakeholders, including public health groups, trade associations and economists. After analysing the responses to the call for evidence, the Government then launched a consultation on alcohol duty reform at Autumn Budget 2021. This consultation closed in January 2022 and received over 350 responses. Responses and evidence are published on the government website.

Similarly, the Government considered evidence which suggested that heavier drinkers consumed proportionately higher ABV drinks. For example, the Institute for Fiscal Studies published analysis that suggested that adults drinking 40 units per week consumed drinks at 18% ABV average, whereas those drinking 10 units per week consumed drinks at 14% ABV average. By failing to tax products consistently in line with their ABV, the duty system is not effectively targeted at the most harmful drinking.

The new alcohol duty system has been widely welcomed by public health stakeholders on this basis and is in line with WHO’s recommendation to base a duty system on alcoholic strength. Evidence suggests alcohol harm is linked to affordability, and the Government is addressing this through the alcohol duty reform.

These reforms have public health at its heart and the new strength-based duty system will incentivise consumption of low alcohol drinks, whilst reducing the consumption of stronger drinks more associated with alcohol harm. The Government has committed to evaluating the policy and its impacts after implementation.